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How to Make a General Ledger - Part 1

Prior to responding to the question "How to prepare a general journal", let us remember what this accounting idea indicates. We can comprehend general journal as a list of accounts which are utilized in the accounting of the specific company. This journal includes balance sheet and earnings statement accounts, which summarize all of the monetary data and modifications to the monetary data for the specific period of time, i.e. generally it's a month.

We can stipulate 3 primary steps in preparing this journal:

  1. Its planning is one of the steps in the accounting cycle and this is done only in the end the business dealings which occurred during the accounting time period were recorded or journalized within the general diary. So the initial step is preparing this edger is to journalize business transactions.
  2. Afterward general diary information are posted in to the general journal accounts. The account can also be an accounting idea and is used to report change in person kind of asset, legal responsibility, equity, earnings or costs. Each kind of those monetary statement parts will have its own account, i.e. cash will have cash account, inventory will have inventory account, accounts payable will have accounts payable account in the main journal.
  3. In the end the general diary information were posted in to the general journal corresponding accounts, all of the accounts are summarized, which means that balances within the accounts are calculated and will be used further to prepare trial balance and financial statements.

And further let's discover short instance assisting to learn how to prepare a general journal:

We have the next data concerning the dealings within the organization Mastening numbers. In the beginning of July the organization had inventory, the cost of which was Dollar150, the debt to suppliers was Dollar230, cash staying with you was Dollar800. The next dealings will be considered as happened in July:

a. bought inventory on credit for Dollar1500 / b. paid suppliers a part of debt, i.e. Dollar560 extra cash from bank.

1 action: journalize these dealings. The next records will be carried out:

a deal

D Stock Dollar1500

_D Company accounts payable Dollar1500

Explanation: purchase of inventory on credit

b deal

D Company accounts payable Dollar560

D Cash in bank Dollar560

Explanation: having to pay from bank to suppliers a part of debt

Within the next thing about this article we will ongoing with this instance.


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