Posting to the gl and preparing tb 08012013


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Posting to the gl and preparing tb 08012013

  1. 1. Posting to the General Ledger and Preparing the Trial Balance 1 August 2013
  2. 2. Introduction • There is a need for another record in which data appearing in the journal may be summarized to show the status of each item or account. • A group of accounts constitutes a ledger. • The general ledger is also known as the book of final entry. • The process of transferring the data from journal entries to the individual account in the ledger is called posting.
  3. 3. Forms of General Ledger Standard Form Running Balance Form
  4. 4. The Chart of Accounts • A chart of accounts is a listing of all the account titles being used by the business in its operations including their respective account numbers, at the time the business is organized.
  5. 5. The Trial Balance • The trial balance is a list of schedule of open accounts in the general ledger with their corresponding account balances, i.e., the difference between the total debits and total credits of an account in the ledger. • It is prepared to verify the equality of debits and credits in the ledger at the end of each accounting period or at any time the postings are updated.
  6. 6. The Trial Balance, Characteristics: • It is a list of accounts. • The list of accounts is unclassified; it does not attempt to state whether accounts listed are assets or liabilities, current or long term. • The accounts listed are normally those with open balances, that is, they have peso amount balances. • The accounts are listed in ledger orders
  7. 7. The Trial Balance, Limitations: Experience proves that not all the trial balances that we prepare are balanced. The following are the steps in locating errors in the trial balance: • Prove the addition of the trial balance by adding columns in the opposite direction from that previously followed.
  8. 8. The Trial Balance, Limitations: • If the error does not lie in the addition, determine the exact amount by which the trial balance is out of balance. The amount of the discrepancy is often a clue to the source of the error.
  9. 9. The Trial Balance, Limitations: • If the difference is divisible by 9, this suggests either a: • Transposition Error - An interchange in the order of the digits of a number, e.g., 87 for 78; 453 for 354; 1234 for 4231; etc. • Transplacement Error - Also known as sliding error, occurs when some or all the digits of a number are moved one or more places to the left or right, e.g., 450.00 written as 45.00 or as 4.50 or as 4005.00.
  10. 10. The Trial Balance, Limitations: • If the difference is an even number, divide it by 2. The quotient could be the balance of an account that is erroneously copied to the trial balance on the wrong side or the amount of a journal entry that is posted on the wrong side of the ledger.
  11. 11. The Trial Balance, Limitations: • Compare the amounts in the trial balance with the balances in the ledger. Be sure that no account is omitted. • Recompute the balance of each ledger account.