Summarized Presentation of Journal Entries Homework Answers
Â In language of accounting, journal entry is the recording of each transaction. There could be a number of accounting in a journal entry, each such accounting is either a credit or debit. For a journal entry to be balanced, the total number of credits should be equal to the total number of debits.
Recurring values like amortization and depreciation can also be recorded in journal entries. Students can search for topics like summarized presentation of journal entries homework answers online to get more details about journal entries.
Basic structure of journal entries
In journal entry, the credits and debits are recorded on day to day basis with dates. The entries are accompanied with little explanation which is written with full description so that, analysts can easily understand the complete transaction. Each transaction in the entry can be supported with a document of proof such as a receipt or a copy of the cheque etc. A referencing code also called the folio number can be added to the entry.
This number is a link between two documents. If there has been a transaction, the cheque number issued for the same would be the folio number. Usage of folio number helps in tracing the transaction easily. More examples about folio numbers can be obtained by searching for links like summarized presentation of journal entries homework answers online.
The objective of journal entries
Information regarding all financial transactions in a business can be obtained from journal entries. Financial analysts use these entries to examine the impact of various transactions on the business. All entries have the dates of transaction, the name of the parties, the record of debit and credit with summary of details comprising the transaction.
The journal entries are so specific that the details of each transaction can be traced back years after the actual transaction has been made. Although an accounting software can help to maintain any such data but for organizations that are startups, maintaining journal entries can be very helpful as they will keep track of transactions without involving the cost of the software.
Type of accounting in journal entries
- Single entry system
In this format, each entry is recorded on a separate line; there is a different line for each entry. The debit on purchase of a product can be recorded in one line, credit from any customer can be recorded in another line.
Thus there will be two different entries in this case. Single entry system can be useful for people who have started a small business where the transactions involved are simple. There is no requirement of any special training for carrying out single entries; it can be handled by anyone.
- Double entry system
In this format, usage of columns is made to record details of various information in one line. There could be a debit entry for purchase of any equipment and a credit entry for sale of a product both recorded on one line but different columns. There can be requirement of more columns, but usually, a minimum of two columns are necessary one for accounting debits and the other for credits.
At year end or end of a financial cycle if total number of debit entries are equal to total number of credit entries, then the account is termed as balanced. Learners can get more information on types of entry by searching for topics like summarized presentation of journal entries homework answers online.
Parameters to be known for journal entry
Knowledge of the following is required to account journal entries â€“
- Account types
- Important accounting rules
- Working experience
Basically, accounting involves three types of accounts â€“
These are accounts that belong to individuals, business or organization, etc. Personal accounts can have subtypes as follows â€“
- Natural account
This is the type of account that belongs to a living individual.
- Artificial account
This is the type of account that belongs to an organization or a group.
- Representative account
Accounts like drawings account, capital account fall under this type.
The accounts that are connected to assets are called real accounts. Examples could be equipment, plant, etc.
The accounts that record profits, losses, expenses, etc. are termed as nominal accounts. Examples could be salary accounts.
Important accounting rules
There are three main rules that should be followed for journal entry â€“
- The receiver should always be debited, and the giver should never be credited.
- Whatever comes inward should be debited and whatever goes outward should be credited.
- All losses and expenses should be debited, all gains and incomes should be credited.
It is pointless to say that perfection in journal entry can come with more and more practice. Thus one who has experience can make journal entries efficiently.
More information on these parameters can be obtained by searching for topics like summarized presentation of journal entries homework answers online.
Advantages involved in journal entry
A ledger entry can be used to record transactions, yet there are reasons for which journal entries are made â€“
- In a journal entry, the transactions are recorded date wise in a chronological manner. This feature of journal entries helps to track any particular transaction whenever needed. One just has to know the date of the required transaction and can find it easily from the journal entry.
- In a journal entry, the transactions are categorized into aspects of credits and debits. This is very helpful for analysts as there is clear discrimination of each credit and Moreover separate columns are used for debit and credit, so one does not need to try to locate, rather there is a clear column for debit and one for credit. This also helps when the data is being noted into ledger.
- The transactions in a journal are fed immediately after the transaction has been made. Thus every possibility of omitting a transaction is completely reduced.
- The journal entry involves complete detail of each transaction made, at times the same is supported with needed documents like receipts or cheques. At times little description is also noted in the entry in a separate column, so the journal basically has everything recorded at a single place. Record of every transaction is thus noted permanently and can be easily used for future reference.
- While analyzing the ledger, in case the trial balance does not tally, then the record of that transaction can be easily cross verified from the journal entry.
- The transaction in the journal entry has all the details noted in separate columns, so when this data is converted into the ledger, then, there is no requirement of noting all the details, when needed, the details can be obtained from the journal entry.
- The journal entry is done immediately after the transaction is made, so there is no chance of missing any entry. Thus conversion into ledger can be done later without any hurry as the organization is sure that no data will be omitted since it is already recorded in the journal entry.
Although journal entry is a manual method in todayâ€™s world of several updated softwares, yet its use is prevalent in upcoming firms due to its easy tracking ability. Students can check topics like summarized presentation of journal entries homework answers online to get more details about the advantages of journal entries.