PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

CHAPTER 5 Postings to ledger accounts and the trial balance

Learning outcome

To be able to post journal entries for a double-entry system to the general ledger accounts to prepare a trial

balance

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

KEY TERMS• Creditors• Debtors• Control accounts• Rules of double entry• Trial balance• Errors in a trial balance

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

GENERAL LEDGER ACCOUNTS

Journal totals posted to ledgers to:– summarise information– classify information

Facilitates:– locating information– extracting information

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

TRANSACTION FLOWCHART

Figure 5.1 Flowchart of transactions into accounting records

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

DOUBLE-ENTRY RULESDOUBLE-ENTRY RULES

DEBIT SIDE (DR) CREDIT SIDE (CR)

ASSETS

EXPENSES

EQUITY

LIABILITIES

REVENUE

Decreases

Decreases

Decreases

Decreases

Increases

Increases

Increases

Increases

Increases Decreases

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

DOUBLE-ENTRY RULES cont.

ASSETSEXPENSES

EQUITYREVENUE

LIABILITIES

Debit

Increases

Debit

Decreases

Credit

Decreases

Credit

Increases

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

SUMMARY OF DOUBLE-ENTRY RULES

Account balance

ASSETS Debit increase Credit decrease

EXPENSES Debit increase Credit decrease

EQUITY Debit decrease Credit increase

REVENUE Debit decrease Credit increase

LIABILITIES Debit decrease Credit increase

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

DEBTORS CONTROL ACCOUNT

DEBIT CREDIT

Opening balance Total sales return

journal

Total of sales journal

Cash received from debtors

Interest on overdue accounts

Discount allowed

Dishonoured cheques

Bad debts

Bad debt recovered Contras

Closing balance

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

CREDITORS CONTROL ACCOUNT

DEBIT CREDIT Cash paid to creditors Opening balance

Discount received Contras

Total of purchases journal

Closing balance Interest charged on overdue accounts

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

TRIAL BALANCE

• Ensures ledgers are balanced

• Every debit has a corresponding credit

• Lists all general ledger accounts, with balances, in numerical order

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

TRIAL BALANCE cont.• Separate columns for debit balances and

credit balances show if total debits equal total credits

• Control accounts, not subsidiary accounts, appear in trial balance

• ‘Nil’ balances usually not included

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

CHECKLIST FOR POSTING FROM JOURNALS TO LEDGER ACCOUNTS

JOURNAL POSTINGS

Purchases (PJ) CREDIT

• Creditors control accountDEBIT

• Purchases column to the Purchases a/c• Total GST column to the GST input a/c•From ‘Other’ column, debit asset purchases and expenses to the relevant accounts

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

CHECKLIST FOR POSTING FROM JOURNALS TO LEDGER ACCOUNTS cont.

SALES (SJ) DEBIT

• Debtors control accountCREDIT

• Sales column to the Sales account

• Total GST column to the GST collected account

• From ‘Other’ column for asset sales, credit to the relevant accounts

CASH RECEIPTS (CRJ)

DEBIT

• Total cash received to Cash at bank account

• Discount allowed columnCREDIT

• Debtors control account

• Sales column to the Sales account

• Total GST column to the GST collected account

• From ‘Other’ column, credit each account for the amounts shown

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PPTs to accompany Accounting and Bookkeeping Principles and Practice by AAT & David Willis 2011 McGraw-Hill Australia Pty Ltd

CHECKLIST FOR POSTING FROM JOURNALS TO LEDGER ACCOUNTS cont.

CASH PAYMENTS (CPJ)

CREDIT

• Total cash paid to Cash at bank account

• Discount revenue columnDEBIT

• Creditors control account

• Purchases column to the Purchases a/c

• Total GST column to the GST input a/c

• From ‘Other’ column, debit each account for the amounts shown

GENERAL (GJ) Post these in date order:

DEBIT every a/c in the debit column

CREDIT every a/c in the credit column

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