General Journal

General Journal Each transaction a company makes throughout the year is recorded in its accounting system. There are many different journals that are used to track categories of transactions like the sales journal, all company transaction are recorded in the general journal. The general journal is the master journal that all company transactions or journal entries are recorded in. A typical general journal has at least five columns: one for the date, account titles, posting reference, debit, and credit columns. Here is the general journal for Blur Guitar, Inc. General Journal Example

General Journal Date 5/1/2016

5/15/16

Account title and Description

PR

Debit

Inventory Cash To Record Inventory Purchase

1,000.00

Utilities Cash To record May utility payment

1,000.00

Credit

1,000.00

1,000.00

As you can see, each journal entry is recorded with the date and a short description of the transaction. Also, the debits of each transaction are listed before the credits in each transaction. As Mabuhay Cooperative buys inventory and makes sales throughout the year, it records all of the transactions as journal entries in the general journal. At the end of the year or the end of a reporting period, these transactions are taken from the general journal and posted to individual ledgers. Once the journal entries are posted to the ledgers, the posting reference column can be filled out with the ledger number or abbreviation that the entry was posted to. The ledgers can then be used to make a trial balance and eventually a set of financial statements.

Subsidiary ledger Definition Special or supporting ledger (such as cost ledger, purchases ledger, sales ledger) that provides more detailed information about individual accounts than a general ledger. Used by firms with larger number of customers (or creditors), these ledgers divide masses of financial data into more manageable parts. Total of all individual accounts in a subsidiary ledger equals the balance of the corresponding summary account (called control account) in the general ledger.

Accounts Receivable Subsidiary Ledger What is an 'Accounts Receivable Subsidiary Ledger' An accounts receivable subsidiary ledger is an accounting ledger that shows the transaction and payment history separately for each customer to whom the business extends credit. The balance in each customer account is periodically reconciled with the accounts receivable balance in the general ledger, to ensure accuracy. The subsidiary ledger is also commonly referred to as the sub ledger or subaccount.

Accounts Payable Subsidiary Ledger What is an 'Accounts Payable Subsidiary Ledger' An accounts payable subsidiary ledger is an accounting ledger that shows the transaction history and amounts owed separately for each supplier from whom the business receives credit for purchases. The balance in the customer accounts is periodically reconciled with the accounts payable (AP) balance in the general ledger to ensure accuracy. The AP subsidiary ledger is also commonly referred to as the AP sub ledger or subaccount.

General Ledger Definition: A general ledger is the master set of accounts that summarize all transactions occurring within an entity. There may be a subsidiary set of ledgers that summarize into the general ledger. The general ledger, in turn, is used to aggregate information into the financial statements of a business; this can be done automatically with accounting software, or by manually compiling financial statements from the information in a trial balance report (which is a summarization of the ending balances in the general ledger). The general ledger contains a debit and credit entry for every transaction recorded within it, so that the total of all debit balances in the general ledger should always match the total of all credit balances. If they do not match, the general ledger is said to be out of balance, and must be corrected before reliable financial statements can be compiled from it. The general ledger is comprised of all the individual accounts needed to record the assets, liabilities, equity, revenue, expense, gain, and loss transactions of a business. In most cases, detailed transactions are recorded directly in these general ledger accounts. In some cases where the volume of transactions would overwhelm the record keeping in the general ledger, transactions are shunted off to a subsidiary ledger, from which just the account totals are recorded in a control account in the general ledger. In the latter case, a person researching an issue in the financial statements must refer back to the subsidiary ledger to find information about the original transaction.

Journal Voucher example A transaction involving money is always backed up by a payment voucher or receipt. The equivalent back up document for a transaction not involving the movement of money is called a journal voucher. Examples of 'non-cash' transactions include to recognise a donation in kind of a computer, to correct a coding error in a previous closed month, to charge interest on a loan or depreciate fixed assets.

Journal vouchers are usually used by accountants who understand double entry bookkeeping.

Journal voucher is prepared for the transactions which does not relate to sales, purchases, cash, bank, material returns. Journal vouchers are prepared for the following transactions:Opening balances Purchases of fixed assets and other assets on credit Sale of fixed assets and other assets on credit Depreciation on fixed assets. Purchase of any items relating to business expenditures on credit Adjustment entries. Closing entries. Correction entries. Transfer entries. Provisions for expenditures Accrual income.

The entries for transactions which are no repeated very frequently. For example if there are very limited transaction in respect of material return then the journal vouchers can be prepared rather than preparing the purchase return voucher or sales return vouchers etc. Support Documents to be Required for Preparation of Journal Vouchers Following documents are required for preparation of journal vouchers:1.Invoices for all non-trading items. 2.Bills or Debit notes or Credit notes for services availed or provided 3. The debit notes and the credit notes in respect of material returns and other adjustments. 4. For prepaid and outstanding expenses, the copy of payment voucher whenever the same are paid. 5. Any document which can authenticate the happening of journal voucher. 6. For rectification of errors.

Points to be Kept in Mind for Preparation of Voucher While preparing the journal vouchers, the accountant must keep the following points in mind:The support documents must be attached with the journal voucher as far as possible. These support documents must be duly checked and passed by the concerned department. For adjustments, provisions, and corrections, transfers etc. there should be a perfect logic and the working of the transaction must be attached with the journal voucher. The justification of transaction must be approved by the competent authorities. Amount must be written both in figures and words. The journal voucher must be signed by the accountant and the authorized person.

Illustration Provision made for Outstanding Salaries for the month of May”2016 for Php 6,500.00 Prepare the necessary voucher in the books of Mabuhay Cooperative Solution: According to above transaction, no payment has been made but a provision is made for outstanding expenses to know the correct position of the business activities. Therefore, journal voucher will be prepared for above transaction as follows:MABUHAY COOPERATIVE JOURNAL VOUCHER Voucher No.____ Date:___________ PARTICULARS AMOUNT IN Php Debit: Salaries Expenses Account 6,500.00 Total Credit: Expenses Payable Account

6,500.00 6,500.00

Total 6,500.00 Narration: Being provision made for salaries payable for the month of May”2016 as per the copy of salary sheet enclosed. Amount in words: Six Thousand Five Hundred Pesos only. Prepared by: Belle Paule Approved by: Aimee Ventura Bookkeeper Manager