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    Two Major Types of Books in Accounting

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    Janeth Bootan Protacio
    The document discusses the two major types of accounting books: ledgers and journals. It describes the general ledger as containing accounts organized by balance sheet and income statement categories that are used to prepare financial statements. It also describes journals like the general journal and special journals that are used to record unique or routine transactions before posting amounts to the general ledger accounts. The general ledger consolidates activity from the journals. Subsidiary ledgers are also discussed as ledgers used to keep track of detailed transactions for complex general ledger accounts.

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    Two Major Types of Books in Accounting

    Uploaded by

    Janeth Bootan Protacio
    2K views13 pages
    The document discusses the two major types of accounting books: ledgers and journals. It describes the general ledger as containing accounts organized by balance sheet and income statement categories that are used to prepare financial statements. It also describes journals like the general journal and special journals that are used to record unique or routine transactions before posting amounts to the general ledger accounts. The general ledger consolidates activity from the journals. Subsidiary ledgers are also discussed as ledgers used to keep track of detailed transactions for complex general ledger accounts.

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    The document discusses the two major types of accounting books: ledgers and journals. It describes the general ledger as containing accounts organized by balance sheet and income statement categories that are used to prepare financial statements. It also describes journals like the general journal and special journals that are used to record unique or routine transactions before posting amounts to the general ledger accounts. The general ledger consolidates activity from the journals. Subsidiary ledgers are also discussed as ledgers used to keep track of detailed transactions for complex general ledger accounts.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    2K views13 pages

    Two Major Types of Books in Accounting

    Uploaded by

    Janeth Bootan Protacio
    The document discusses the two major types of accounting books: ledgers and journals. It describes the general ledger as containing accounts organized by balance sheet and income statement categories that are used to prepare financial statements. It also describes journals like the general journal and special journals that are used to record unique or routine transactions before posting amounts to the general ledger accounts. The general ledger consolidates activity from the journals. Subsidiary ledgers are also discussed as ledgers used to keep track of detailed transactions for complex general ledger accounts.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13

    Two Major Types of Books in

    Accounting
    By: Group IV
    The Two Types of Accounting Books

    •Ledger
    • The general ledger contains the accounts used to sort and store a company's transactions.
    • The general ledger is organized so that the accounts will appear in the following order:
    • Balance sheet accounts: assets, liabilities, stockholders' equity
    • Income statement accounts: operating revenues, operating expenses, other revenues and
    gains, other expenses and losses
    • The balances and activity in the general ledger accounts are used to prepare a company's
    financial statements.
    •Journal
    • A general journal is used to record unique journal entries that cannot be
    processed in a more efficient manner. For example, checks written, sales invoices
    issued, purchase invoices received, and others can be recorded in a computerized
    accounting system when the documents are processed. Manual accounting
    systems will likely use special journals for recording routine transactions.
    Therefore, the general journal will have a limited amount of entries.
    • In the general journal you must enter the account(s) to be debited and the
    account(s) to be credited along with their amounts and a brief description. Once a
    transaction is recorded in the general journal, the amounts are then posted to the
    appropriate accounts in the general ledger.
    General Journal
    • The process of making a journal entry
    • The first step in the process of preparing a journal entry is to analyze the
    accounts involved in a business transaction and then apply the rules of debit
    and credit based on the type of each account. After identifying the accounts
    involved in the transaction and deciding upon the applicable rules, the journal
    entry is recorded in the general journal in a specified format which includes
    the following details:
    • Date of transaction
    • Ledger accounts involved
    • Amount of transaction
    • A brief narration to describe the transaction
    Special Journal

    • Definition of a Special Journal


    • A special journal (also known as a specialized journal) is useful in a manual
    accounting or bookkeeping system to reduce the tedious task of recording
    both the debit and credit general ledger account names and amounts in
    a general journal.
    • More Examples of Special Journals
    • In addition to the sales journal (used for recording sales on credit), there are
    other special journals which were popular in manual accounting systems. The
    following special journals were more efficient than recording all transactions in
    the general journal:
    • Cash disbursement journal for recording checks written.
    • Cash receipts journal for recording cash sales and other money received.
    • Purchases journal for recording purchases on credit of goods to be resold.
    (Cash purchases are recorded in the cash disbursement journal. Purchases of
    items such as equipment are recorded in the general journal.)
    General Ledger

    • (or simply posting) is a process in which entries from general journal are
    periodically transferred to ledger accounts (also known as T-accounts). It is the
    second step of accounting cycle because business transactions are first recorded
    in the journal and then they are posted to respective ledger accounts in the
    general ledger.
    Subsidiary Ledger

    • Since general ledger hold all the historical journal entries, some key general
    ledger accounts become so complex that a separate ledger is needed to keep
    track of its transactions. For example, a company’s general ledger might include
    only one accounts receivable account yet the company may have thousands of
    customers. In such a situation, it is necessary to create a subsidiary ledger to hold
    each customer account and include the grand total of that ledger in the general
    ledger.
    Thank You!

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