After all the transactions posted from the journal, we can form a completer ledger. (An example can be seen on p35-38.) A trial balance (referred to Chapter 1) can be prepared to help you prove the equality of total debit amounts and total credit amounts.
Chapter 2
Accounting Cycle (I) Journalizing, Posting and Preparing Trial Balance
Accounting Cycle

Accounting cycle: a sequence of accounting procedures which are repeated continuously during each accounting period.
prepare financial statements
prepare a post-closing trial balance
prepare a trial balance
complete a work sheet
The General Journal


A journal: a book in which all business transactions are initially recorded. The process of recording business transactions in the journal is called journalizing.

General ledger: a book containing all the ledger accounts of a business.
GENERAL LEDGER
ACCOUNT NO.
ACCOUNT
DATE ITEM POST REF.
DEBIT
CREDIT
BALANCE DEBIT CREDIT
Posting to the General Ledger



Posting: The process of transferring the journal entries from the journal to ledger accounts. Generally, we follow four steps:

Assets (100-199) 111 Cash 112 Accounts Receivable 113 Prepaid Insurance 121 Trucks 123 Equipment 125 House Liabilities (200-299) 211 Accounts Payable
① ACCOUNT
GENERAL LEDGER
Cash ②
④
ACCOUNT NO. 111
DATE ITEM POST REF.
200×J an.
DEBIT
CREDIT
②
BALANCE DEBIT CREDIT
1
1
1000
0
0 0
00
1000
0 0 0 00
Posting to the General Ledger


Accounting Cycle
journalize business transactions journalize and post the adjusting entries journalize and post the closing entries
post journal entries to ledger accounts
An accounting period/fiscal period: any span of time covering a complete accounting cycle. An accounting year/fiscal year: an accounting period composed of twelve consecutive months.
The Chart of Accounts

Chart of accounts: the official list of all the accounts and their account numbers.
e.g.
Guangli Services Chart of Accounts Owner’s Equity (300-399) 311 Li, Capital 312 Li, Drawing Revenue (400-499) 411 Income from Services Expenses (500-599) 511 Gas Expense 512 Utilities Expense 513 Wages Expense
The simplest form of journal is called a general journal.

The General Journal
GENERAL JOURNAL PAGE
DATE
DESCRIPTION
POST REF.
DEBIT
CREDIT
The General Ledger
Li, Drawing Income from Services
Gas Expense Utilities Expense Wages Expense
500 28 300
200 250 9 000 1 068 300 1 068 300


e.g.
DATE
200× Jan. 1 Cash
GENERAL JOURNAL
PAGE ③
1
DESCRIPTION
POST REF.
1000
DEBIT
0 0 0 00
CREDIT
111
1000 0 0 0 00
Li, Capital
Original investment by Mr. Li in Guangli Services.
e.g.
Guangli Services Trial Balance January 31, 200×
DEBIT Cash Accounts Receivable Prepaid Insurance Trucks Equipment House Accounts Payable Li, Capital 444 450 1 300 3 600 240 000 9 000 360 000 40 000 1 000 000 CREDIT
Enter the date of transaction; Enter the amount of transaction and the new balance of the account; Insert the page number of the journal in the Posting Reference column of the ledger account (cross-reference); Insert the ledger account number in the Posting Reference column of the journal.