Disbursement Transactions Overview

Study Notes

Journal vouchers are documents used for transactions lacking another source document.
Essential considerations before recording include:
- Determine the value received (debit) and the value parted with (credit).
- Identify affected accounting elements (Assets, Liabilities, Owner’s Equity).
- Assess effects on these elements (increase or decrease).
- Choose appropriate account titles that reflect transaction effects.
- Establish the amount to be recorded for each account title.

Debit represents the value received in an economic transaction, positioned on the left side of the accounting equation.
Credit reflects the value given up, located on the right side of the equation.
Every debit entry must equal a corresponding credit entry, ensuring a balanced transaction.

Debits: Increase in Assets and Expenses; Decrease in Liabilities and Owner’s Equity.
Credits: Decrease in Assets and Expenses; Increase in Liabilities and Owner’s Equity.

T-Accounts visually represent accounts, with debits on the left and credits on the right.
They reflect changes caused by economic transactions and simplify ledger representation.

Deals with how balances are established based on the difference between debit and credit totals.
Balances are presented in the trial balance.

A structured list of all account titles and codes for tracking business transactions.
Includes sections for Assets, Liabilities, Owner’s Equity, Revenues, Cost of Sales, and Operating Expenses.
Example accounts:
- Assets: Cash, Accounts Receivable, Merchandise Inventory.
- Liabilities: Accounts Payable, Notes Payable.
- Owner’s Equity: Capital, Drawings.

Real Accounts:
- Assets: Resources expected to provide future economic benefits.
- Liabilities: Current obligations the business must pay.
- Owner’s Equity: Residual interest after liabilities are deducted from assets; includes capital and withdrawals.

General Journal:
- First point of recording business transactions with date, description, posting reference, debit, and credit.
General Ledger:
- Final entry book where account balances are compiled for financial reporting.

Recorded amounts and effects on accounts:
- Billed a customer for services, partial payment recorded.
- Purchases and payments for shop supplies and cash withdrawals noted.