Study Set Content:
Various kinds of journal records:
a. Cash receipt journal
b. Sales journal
c. Purchase journal
d. Cash disbursement journal
e. General journal
Evidence of the various transactions
can be proven by source documents
such as:
a. Official receipt
b. Purchase sales invoices
c. Check stubs
d. Tickets and etc.
The transactions are entered
chronologically in the journal. This process
is called
Journalizing
denotes the recording of the transaction
event.
Journal entry
In the double-entry method, each
journal entry is composed of two sides, the
debit and credit
For every value
received by the business, there must be an
equal value parted with.
For every value
received by the business, there must be an
equal value parted with.
Steps in Journalizing
1. Read and understand each transaction.
2. Specify the account, titles affected by the
transaction. Classify them as asset, liability,
or owner’s equity.
3. Determine whether the transaction results in
an increase or decrease in each account.
4. Using the rules of debits and credit,
determine whether to debit or credit the
account to record its increase or decrease.
5. Enter the transaction in the journal.
6. Write the date of transaction.
7. Debit the account title fist and the amount
opposite to it and under the debit column.
The credit account title is written next and
indented. The credit amount should be
written under the credit column.
Once the transactions are recorded in the
appropriate journal, they need to be posted
on the
Ledger
are a convenient tool for
systemizing the financial activities and for
preparing the income statement and
balance sheet.
Ledgers
The process of transferring entries or
information from the journal to the ledger.
Posting
Debit entries in the journal are transferred to
the debit side of the appropriate account in
the ledger and credit entries in the journal
are transferred to the credit side of the
proper account in the ledger.
Posting
There is no
fixed procedure in posting.
There is no
fixed procedure in posting.
Whatever
procedure is chosen by management
should be followed consistently in order to minimize error
Whatever
procedure is chosen by management
should be followed consistently in order to minimize error
Also called the “book of final entry”
General Ledger
Transactions are finally transferred or
recorded in the
General Ledger
Composed of a group of accounts.
General Ledger
is to
provide a convenient mechanism for
scrutinizing the financial position of the
pharmacy.
General Ledger
Used to keep track of payments, and what
and how much the pharmacy owes. Theyare used partly for convenience and partly
for control purposes. These ledgers help in
examining how much is owed, and who
owes what, and what is owed. If the
pharmacy establishes credit limits for its
private pay customers or if credit limits are
established by suppliers, it must be noted in
the ledgers so that when the limits are
reached, the management will know.
Accounts Receivable and .
Accounts Payable Ledgers
The recorded information in the ledger
comes from the
Journal
Information in the journal is grouped
according to
Transaction
