Accounting Principles PDF

Prepared by Coby Harmon University of California, Santa Barbara Westmont College 7-0  Subsidiary Ledgers 7-0 LO 2 Describe the nature and purpose of a subsidiary ledger.  Subsidiary Ledgers Used to keep track of individual balances....

Prepared by Coby Harmon University of California, Santa Barbara Westmont College 7-0  Subsidiary Ledgers 7-0 LO 2 Describe the nature and purpose of a subsidiary ledger.  Subsidiary Ledgers Used to keep track of individual balances. Two common subsidiary ledgers are: Accounts receivable (customers’) Accounts payable (creditors’) Illustration 7-2 Relationship of general ledger and subsidiary ledgers 7-0 LO 2 Describe the nature and purpose of a subsidiary ledger.  Illustration 7-2 Subsidiary Ledgers Relationship of general and subsidiary ledgers ‫…يجري التحميل‬ 7-0 LO 2  Subsidiary Ledgers Advantages of Subsidiary Ledgers Show in a single account transactions affecting one customer or one creditor. Free the general ledger of excessive details. Help locate errors in individual accounts. Make possible a division of labor. 7-0 LO 2 Describe the nature and purpose of a subsidiary ledger.  Special Journals Question Each of the following is a subsidiary ledger except the: a. accounts receivable ledger. b. accounts payable ledger. c. customer’s ledger. d. general ledger. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Used to record similar types of transactions. Illustration 7-5 If a transaction cannot be recorded in a special journal, the company records it in the general journal. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Sales Journal Illustration 7-6 2014 Perpetual inventory system, one entry at selling price in Sales Journal results in a debit to Accounts Receivable and a credit to Sales. Another entry at cost results in a debit to Cost of Goods Sold and a credit to Inventory. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Posting the Sales Journal Illustration 7-7 2014 2014 2014 2014 Companies make daily postings from the sales journal to the individual 2014 accounts receivable in the subsidiary ledger. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Posting the Sales Journal Illustration 7-7 2014 2014 2014 2014 Posting to the general ledger is done monthly. 2014 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Advantages of Sales Journal One-line entry for each sales transaction saves time. Only totals, rather than individual entries, are posted to the general ledger. A division of labor results. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Cash Receipts Journal Illustration 7-9 2014 In the cash receipts journal, companies record all receipts of cash. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Posting Illustration 7-9 the Cash Receipts Journal Not all of the subsidiary or general ledger accounts are shown on the illustration to the right. See Illustration 7-9 for the complete illustration. Illustration 7-9 7-0  Special Journals Proving the Ledgers Illustration 7-11 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Question Cash sales of merchandise are recorded in the a. cash payments journal. b. cash receipts journal. c. general journal. d. sales journal. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Question Which of the following is not one of the credit columns in the cash receipts journal: a. Other accounts b. Accounts payable c. Accounts receivable d. Sales 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Illustration 7-13 Purchases Journal 2014 2014 2014 Daily postings are made from the purchases journal to the accounts 2014 payable subsidiary ledger. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Illustration 7-13 Purchases Journal 2014 2014 2014 At the end of the accounting period, the company posts totals to the general ledger. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Proving the Ledgers Illustration 7-14 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Question All of the following are advantages of using subsidiary ledgers except they: a. show transactions affecting one customer or one creditor in a single account. b. free the general ledger of excessive details. c. eliminate errors in individual accounts. d. make possible a division of labor. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Cash Payments Journal Illustration 7-16 2014 ‫…يجري التحميل‬ In a cash payments (cash disbursements) journal, companies record all disbursements of cash. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Illustration 7-16 Cash Payments Journal 2014 2014 2014 2014 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Illustration 7-16 2014 2014 2014 2014 2014 Cash Payments Journal 2014 2014 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Proving the Ledgers Illustration 7-17 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Question Credit purchases of equipment or supplies other than merchandise are recorded in the: a. cash payments journal. b. cash receipts journal. c. general journal. d. purchases journal. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Question Cash payments of merchandise are recorded in the: a. cash payments journal. b. cash receipts journal. c. general journal. d. purchases journal. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Effects of Special Journals on General Journal Special journals substantially reduce the number of entries that companies make in the general journal. Only transactions that cannot be entered in a special journal are recorded in the general journal. Also, correcting, adjusting, and closing entries are made in the general journal. 7-0 LO 3 Explain how companies use special journals in journalizing.  Special Journals Illustration 7-18 Journalizing and posting the general journal 7-0 LO 3 Explain how companies use special journals in journalizing.