General Journal

The accounting cycle refers to the series of steps involved in recording, classifying, and summarizing financial information. The general journal is used to initially record transactions and contains details like dates, accounts, references, debits, and credits. The general ledger contains individual accounts organized in a T-shape and is the book of final entry. The trial balance is a tool used to ensure total debits equal total credits and that account balances are correct. The income statement displays the profit or loss of the business by subtracting expenses from revenues. The statement of owner's equity shows the investment, income, and withdrawals of the business owner over time.

Uploaded by

aalmani23

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as DOCX, PDF, TXT or read online on Scribd

0% found this document useful (0 votes)

40 views3 pages

General Journal

Uploaded by

aalmani23

We take content rights seriously. If you suspect this is your content, claim it here.

Available Formats

Download as DOCX, PDF, TXT or read online on Scribd

You are on page 1/ 3

Fundamental of Accounting Principles

Accounting Cycle
The series of Accounting Procedures applied in Recording, Classifying, and Summarizing Accounting Information.

Accounting Cycle

General Journal
It is used for to record General Transactions. The Journal used to be a sequential (day-to-day) record of business transactions. All vouchers are first recorded in General Journal. It is also called the Book of Original Entry or Day Book. It is a book that keeps day-to-day record of transactions.

Columns in General Journal

1. 2. 3. 4. 5. Date Description or ( Account Title & Explanation) Reference or LP (Ledger Page) Debit Credit

Standard form of General Journal

NAME OF THE COMPANY General Journal For the period of . Description Reference

Date:

Debit

Credit

Prepared by: Sir Asghar Ali Narejo

Page 1

Fundamental of Accounting Principles

General Ledger (The T Account)
This is called book of final entry. Ledger is a book that keeps separate record for each account (Book of Accounts). We know that Account or Head of Account is regular record of transactions of one type. An account in its simplest form is a T-shape and looks like this:

Form of General Ledger

Account Title Debit Credit No:

Trial Balance:
It is used as device to prove that all debit accounts are equal to the all credit accounts this proof of equality of debit and credit account balances is called trial balance. A two column schedule listing the names and the debit or credit valances of all accounts in the ledger in the order in which they appear in the ledger. y y Debits are equal to credits Amount of debit and credit is computed correctly.

NAME OF THE COMPANY Trial Balance Jan 31,2012 Account Title

Debit

Credit

What is Income?
Income is the increase in the owner s equity due to the operations of the business is called income.

What is loss?
Loss is the Decrease in the owner s equity due to the operations of the business is called income. Mathematically: y y Revenue Expense = Net income Revenue Expense = Net Loss

Prepared by: Sir Asghar Ali Narejo

Page 2

Fundamental of Accounting Principles

Income statement
Income statement is the statement that shows the profit and loss condition of the business or owner. NAME OF THE COMPANY Income Statement For the month ended Jan 31,2011

Revenue:
Type of Revenue 0000 0000 0000 0000 0000 0000

Expenses:
Type of expenses Type of expenses Type of expenses Type of expenses Type of expenses Net Income/Loss Revenue:
Revenue is the price of goods sold and services rendered during the accounting period.

0000

Expenses:
The expenses are the costs that are used to earn revenue. These are called costs of doing business means costs of various activities necessary to carry business.

Statements of Owner s Equity

The statement that shows the investment of owner with income earned and drawing made by owner till specific time NAME OF THE COMPANY Statements of Owner s Equity For the month ended Jan 31,2011