3 The Day to Day of Things
So, you may ask, do you just add and subtract money from the Ledger Records daily as your week progresses? Well not directly. Mistakes can be made and lost more easily. The book of first entry for the daily business in a Journal - specifically the general journal. The Credits and Debits are balanced here and then (periodically with paper systems) transferred (en block) to the Ledgers. Barring transposition errors the accounts should be in balance from the Journal entries. Here is and example of a paper system's Journal page.
What does this look like in our system? Here is the ongoing display of the live journal (after display is updated).
Another view is the Report of the General Journal contents.
When we go to the activity menu, as we can see in the first screen shot above, we can then bring up the Journal Entry form by clicking 'Journal Entry'.
For interest the form is in front or a display report of a single transaction that has several associated accounting memos.
Ok, lets do an actual journal entry to post a payment received on an account receivable. As we can see in the General Journal report to the left below, we have a sales invoice (#123) for a Mrs Jones. The invoice is the source document, but I have not shown it here.
Oops, the Money was credited to the General assets account 100 instead of the Bank Specific account 110. This would be fine if we hadn't created the specific bank account for this purpose. We correct this with and adjusting entry!
And the journal is now corrected, right?
Nope, I also put the income from Mrs Jones purchase as and expense. We need to correct that with another adjusting journal entry.
Look at the revenue and expense accounts to see what I did.We can see the income and expense position of the business by calling for the Income Statement Report.
Now the income is in general sales and removed from the expenses. But notice at all times the balance of edits to credits was maintained. We just elected to show the money as an expense - it became a minus expense so the balance was maintained.
Check out the corresponding the General Ledger account for the bank where it all was posted - automatically. That's the nice thing about computer accounting systems. No more weekly or daily batch posting.
Now, let's look at how we paid the electric bill evident above in the Income statement.
We can check the accounting integrity with a trial balance at any time. But it's up to us to make sure we assign the incoming and outgoing money to the correct accounts. No matter what, everything done by you to the business record is done with the General Journal. The are many ways to look at what was done and how the business going.
The Bigger picture you'll recall is the Balance Sheet.
