The document outlines the principles of accounting, focusing on the general journal as the initial record for all accounting transactions. It details the process of journalizing transactions, including analysis and posting to ledger accounts, using an example from Moon Services Inc. The document also provides specific transaction entries into a general journal for November 2015.

1. Principles of Accounting
PRESENTED TO: Sir Rana Waseem

2. TOPICS: JOURNAL AND LEDGER
PRESENTED BY: M KASHIF

3.  A general journal is the first accounting record.
 It is just like a basket in which all accounting transactions are recorded in order of
their occurrence.
 It is called the original book of entry.
General Journal:

4. There are generally two steps to making a journal entry.
JOURNAL ENTRY STEPS:
 Analyze Transactions
 Journalizing Transactions

5. the business event must be analyzed to see how the transaction changed the accounting equation.
When the company purchased the vehicle, it spent cash and received a vehicle. Both of these
accounts are asset accounts, so the overall accounting equation didn't change.
Analyze Transactions:

6. After the business event is identified and analyzed, it can be recorded. Journal
entries use debits and credits to record the changes of the accounting equation
in the general journal.
Journalizing Transactions

7. When Increases When Decreases
Assets
Liabilities
Capital / Owner Equity
Revenue
Expense
Debit
Credit
Credit
Credit
Debit
Credit
Debit
Debit
Debit
Credit
DEBIT AND CREDIT RULE:

8. Let’s understand the format of general journal and the process of making a
journal entry through an illustration.
Format of general journal
Transaction:
January 05: Purchase of machinery by making cash
payment of $15,000.
Analysis of transaction:
Account title type of Account Increase/Decrease Debit/Credit
Machinary Asset Increase Debit
Cash Asset Decrease Credit

9. According to rules of debit and credit, when an asset increases, its account is debited and when an asset
decreases, its account is credited. So the journal entry would be made as follows:
After making journal entries in the journal, they are periodically posted to the ledger
accounts.
Recording journal entry:
Date Account titles and explanation Debit Credit
2015
Jan,05 Machinary 15,000
Cash 15,000
(purchased machinery by paying cash)

10. Example:
The Moon Service Inc. engaged in the following transactions during the month of November 2015:
•Nov. 01: Kashif deposited $120,000 cash in a bank account in the name of the business.
•Nov. 03: Paid office rent for the moth of November $500.
•Nov. 06: Purchased office supplies $250.
•Nov. 12: Purchased business car for $25,000. Paid $10,000 cash and issued a note for the balance.
•Nov. 21: Owner’s withdraw $5,000 cash.
•Nov. 23: Billed customers $30,000 for services rendered during the month.
•Nov. 25: paid salaries advance for the month of December $1,000.
•Nov. 28: Paid utility bills for the month of November $180.
•Nov. 29: Received $24,000 cash from clients billed on November 21.
•Nov. 30: Paid salary for the month of November $7,500
Required: Record the above transactions in a general journal.

11. Moon Services Inc.
General Journal
November,30 2015
Date Accounts Titles & Explanation Debit Credit
2015
Nov: 01 Cash………………………………………… 120,000
Kashif, Capital……………………. 120,000
(Owner’s Invested in the Business)
03 Rent Expense………………………….. 500
Cash…………………………..... 500
(Paid office Rent)
06 Supplies…………………………………… 250
Cash………………………………….. 250
(purchased office supplies)
12 Car…………………………………………… 25,000
Cash………………………………………. 10,000
Notes payable……………………….. 15,000
(purchased car in partially paid and signing notes)

12. DATE Accounts Titles & Explanation Debit Credit
21 Kashif, Withdraw…………………… 500
Cash…………………………………… 500
(Owner’s withdraw cash)
23 Accounts Receivable………………… 30,000
Services Revenue………………. 30,000
(Account Receivable for Services)
25 Prepaid Salaries………………………. 1,000
Cash…………………………………. 1,000
(paid salaries in Advance for the month Dec.)
28 Utility Expense………………………… 180
Cash……………………………….. 180
( paid utility bills)
29 Cash………………………………………… 24,000
Services Revenue…………... 24,000
( Received Cash from clients)
30 Salaries Expense…………………….. 55,0000
Cash……………………………… 55,000

13. A book or other collection of financial accounts of a particular type.
The procedure of transferring an entry from a journal to a ledger account
is known as posting.
LEDGER:
POSTING:

14. CASH
11/01 120,000
KASHIF, CAPITAL
11/01 120,000