ACC CH 19 Double-entry Accounting + General Ledger

Double-entry accounting

system that records at least 2 effects on the ACC equation for each transaction.

Ledger accounts

show all the transactions that affect a particular item

General Ledger

collective name for the main group of ledger accounts

Debit side (DR)

LHS of a ledger account

Credit side (CR)

RHS of a ledger account

2 Rules for Recording Ledger Accounts

-each transaction must be recorded in at least 2 ledger accounts -each transaction recorded withat least 1 debt side and at least 1 credit sideand these entries must balance

Cross-reference

name of the other account/s affected by a transaction so all accounts affected can be identified

Trial Balance

list of all the accounts in the General Ledger, and their balances, to determine if total debits equal total credits

Footing

an informal process used to determine the balance of an account

Balancing

ruling off an asset, liability, or owner's equity account to determine its balance at the end of a current period and transferring that balance to the next period.

3 Detectable Errors using Trial Balance

- two entries recorded on the same side

- only one entry recorded/missing entry

- different amounts recorded

4 Errors not revealed by Trial Balance

• omitted transaction altogether

• reversed debit/credit entries

• recorded in wrong account

• incorrect amount recorded on both sides