accounting comprehension problem...

Question

enter balances or each account in a four column account(which I know how to do) then journalize transactions for the month. question 1, I can't remember if I need to create a four column account for each account, or if I list them all in the same account. question 2, do I journalize under the balances, in the four column account, or do I make a separate journal?

Answer 1

Here, remember the meaning of the word "balance". First of all, the balance is for one single account only; and, it appears in General Ledger (GL). Second, the balance is a calculated (From total of all debits and credits) positive amount and it is written on the side of larger total (would be either debit, if total of all debits was greater than total of all credits; otherwise, credit, because total of all credits was greater than total of all credits).

 

So, one balance goes with one, and only one, account, and it goes under one, and only one, column for either debit or credit, as the case may be.

 

If you have five debit balances, and three credit balances then each of them correspond to 8 different accounts, respectively. The debit balances will each be written under debit column for respective five accounts; and, credit balances will each be written under credit column for respective three accounts.

 

Journalizing transactions for the month occurs only in General Journal (GJ). Then, from each entry in GJ, locate the account in GL and write the amount in debit or credit column, as the case may be, for the account in GL. This is called posting of GJ in GL.

 

Here, one journal entry goes with one, and only, one, transaction which always involves two or more different accounts. The journal entry follows rules of debits and credits such that the accounting equation is in balance; meaning, total of debits is exactly equal to total of credits of all accounts appearing in that one, single, journal entry representing one, single, transaction.

 

Journalizing in GJ and posting, to GL from GJ, repeats with each, and every, entry (transaction) occurring during the month.

 

At the end of the month (Actually, at the end of the accounting period which may be a month, quarter, or an year, depending upon company policy), balances for all accounts, in GL, are calculated and written, as explained at the beginning, for each account in GL.