Specialised Accounting Services
Recording of miscellaneous transactions
Maximum businesses use a double-entry system of accounting to record all transactions that ensue. This is done through using a combination of debits and credits, numerous accounts and the amounts of the transactions. Businesses generate a chart of accounts, which lists all accounts used. Every transaction is placed into a particular category. The categories used in accounting are assets, liabilities, equity, revenues and expenses. Each category has rules concerning how transactions are recorded and how debits and credits affect them.
Bookkeepers can organize a general journal for miscellaneous transactions that do not fit in one of the four main journals for a business (Cash Receipts, Cash Disbursements, Sales, and Purchases). If you require creating other special journals as the original points of entry for transactions, go ahead. If you keep your books the old-fashioned way on paper be conscious that paper is susceptible to being erroneously lost or destroyed. In this case, you might want to consider keeping the number of journals you maintain to a minimum.
For transactions that don’t fit in the “big four” journals but they don’t essentially warrant the formation of their own journals, you must consider keeping a General journal for miscellaneous transactions. Using columnar paper similar to what’s used for the other four journals, create the following columns:
Date: The date of the transaction.
Account: The account impacted through the transaction. More detail is required here because the General Ledger influences so many different accounts with so many different kinds of transactions.
PR (post reference): Where information about the transaction will be posted at the end of the month. This information is filled in at the end of the month when you do the posting to the General Ledger accounts. If the entry to be posted to the accounts is brief and totaled at the bottom of the page, you can just put a check mark next to the entry in the PR column.
For transactions listed in the General Credit or General Debit columns, you must specify an account number for the account into which the transaction is posted.
General Debit: Comprises most debits.
General Credit: Comprises most credits.
If you have certain accounts for which you assume a lot of activity, you can start a column for those accounts, too. The big benefit of having a separate column for an account is that you’ll be able to total that column at the end of the month and just put the total in the General Ledger. You won’t have to enter each transaction separately.
Numerous businesses also add columns for Accounts Receivable and Accounts Payable because those accounts are commonly impacted by non-cash transactions.
Every transaction in this General journal is non-cash transactions. Cash transactions must go into one of the two cash journals: Cash Receipts and Cash Disbursements.
In a General journal, transactions require to be entered on multiple lines since each transaction impacts at least two accounts (and sometimes more than two). For instance, in the General journal shown in the figure, the first transaction listed is the return of a cheesecake by S. Smith. This return of products sold must be posted to the customer’s account as a credit as well as to the Accounts Receivable account. Also, the Sales Return account, where the business tracks all products returned through the customer has to be debited.
In addition to the five columns earlier mentioned, the General journal has the following two columns:
Accounts Payable Debit: Decreases to the Accounts Payable account. The bookkeeper working with this journal expected that many of the company’s transactions would impact Accounts Payable.
Accounts Receivable Credit: Decreases to the Accounts Receivable account.
At the end of the month, the bookkeeper can just total this journal’s Accounts Payable and Accounts Receivable columns and post those totals to the consistent General Ledger accounts. All transaction details remain in the General journal. Still, because the miscellaneous transactions impact General Ledger accounts, the transactions require to be posted to each affected account separately.
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