Transcript Summary so far…….

Summary
so far…….
What story does
this diagram
show?
 SPECIAL

JOURNALS
Special journals
 classify
and summarise data from source
documents.
 The use of special journals


allows for totals to be entered in ledger accounts,
removing clutter from the General Ledger.
THE GENERAL LEDGER
A ledger is a system of keeping accounts in a double-entry system.
The General Ledger is the main collection of business accounts, e.g.
Bank, Debtors Control, Creditors Control, Capital, etc.
THE SUBSIDIARY LEDGER
The Subsidiary Ledger
• contains all the individual accounts for debtors and creditors
(detail)
POSTING
Posting is the
• process of transferring totals from Special Journals to General
Ledger accounts on the last day of each month.
• Double-entry rules still apply.
PURCHASES JOURNAL
The Purchases Journal records all credit
purchases of stock from creditors, evidenced
by purchase invoices.
DR
CR
DR
+
=
SALES JOURNAL
The Sales Journal records all credit sales of
stock to debtors, evidenced by sales invoices.
CR
DR
CR
+
=
CASH RECEIPTS JOURNAL
The cash receipts journal records all cash received by
the business, evidenced by receipts and cash register
rolls.
+
=
+
+ +
CASH PAYMENTS JOURNAL
The cash payments journal records all cash
paid by the business, evidenced cheque
butts.
+
=
+
+
+
+
Need for CONTROL ACCOUNTS
• So many transactions
• General ledger would get cluttered with the many
individual debtors/creditors accounts
• Control accounts allow for
• totals to be posted
• reduce the bulky detail in the general ledger
• Summary of all debtors/creditors
• The bulky detail of individual debtors or creditors
goes into what is called the subsidiary ledger
POSTING TO THE SUBSIDIARY LEDGER
Individual transactions for debtors and creditors are not
posted to the General Ledger, they are posted to the
Subsidiary Ledger.
THE CREDITORS SCHEDULE
The Creditors Schedule is a report that shows the closing
balance of each individual creditor account from the
Creditors Subsidiary Ledger. The total of these balances
must equal the closing balance of the Creditors Control
account in the General Ledger.
THE DEBTORS SCHEDULE
This schedule lists the closing balances from the Debtors
Subsidiary Ledger and checks them against the closing
balance of the Creditors Control account. This process
of checking is called ‘reconciliation’.
THE RELATIONSHIP BETWEEN CONTROL ACCOUNTS AND
SUBSIDIARY LEDGER ACCOUNTS
• Control accounts summarise the information from the
Subsidiary Ledger accounts.
• Control accounts include Debtors Control, Creditors Control
and Stock Control.
• All control accounts are part of the General Ledger.
• All account balances in the General Ledger will appear in the
Trial Balance.
• All individual accounts for debtors and creditors are in the
Subsidiary Ledger.
• The Subsidiary Ledger accounts are not shown in the Trial
Balance.
• Account balances for debtors and creditors in the Subsidiary
Ledger are summarised in schedules.
• The total of the Debtors Schedule must equal the balance of
the Debtors Control account.
• The total of the Creditors Schedule must equal the balance of
the Creditors Control account.