Question: Debit and credit rules are best learned through practice. The journal is the diary of the company: the history of the impact of the financial events as they took place.Ī journal entry is no more than an indication of the accounts and balances that were changed by a transaction. A list of all recorded journal entries is maintained in a journal (also referred to as a general journal), which is one of the most important components within any accounting system. After analyzing each event, the financial changes caused by a transaction are initially recorded as a journal entry. How does the actual recording of a transaction take place?Īnswer: The effects produced on the various accounts by a transaction should be entered into the accounting system as quickly as possible so that information is not lost and mistakes have less time to occur. Debits and credits are used for this purpose. Question: In an accounting system, the impact of each transaction is analyzed and must then be recorded. Explain the purpose of the matching principle.Explain the purpose of the revenue realization principle.Define “accrual accounting” and list its two components.Prepare journal entries to record the effect of acquiring inventory, paying salary, borrowing money, and selling merchandise.Define “trial balance” and indicate the source of its monetary balances.Describe the purpose and structure of a journal entry.At the end of this section, students should be able to meet the following objectives:
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