Recording Transactions of a Service Enterprise

An Account is a form used for recording increases and decreases in each individual assets, liabilities, capital, revenue, and expenses. The T- account is the simplest form of an account. It is used to record the increases and decreases in an account. Debit side is the left side of an account. Credit side is the right side of an account. Assets=Liabilities + Owners Equity Withdrawals are a distributions of assets to the owner for his personal use. Pencil footing- It is called as such because the totals are written in pencil and in small figures only. Debit Balance- If the total debit exceeds the total credits. Credit Balance- If the sum of the credit exceeds the sum of the Debit. Debit signifies Increase in Assets Decrease in Liabilities Decrease in Capital Increase in Drawing Decrease in Revenue Increase in Expense Credit signifies Decrease in Assets Increase in Liabilities Increase in Capital Decrease in Drawing Increase in Revenue Decrease in Expense

A Journal is a permanent chronological record of business transactions. THE GENERAL JOURNAL 1. Date column. The first column on each general journal page is for the date. 2. Description column. The title of the account debited is written on the first line; while of the account to be credited is written on the second line, indented by about one half inch from the debit. 3. Posting reference column. This column shows the account number of the account debited or credited. 4. Debit column. The amount of the debit is written in this column on then same line as the title of the account debited.

5. Credit column. The amount of the credited is written in this column on the same line as the title of the account credited.

Journalizing is the processentering a transaction in the journal. The Ledger is a complete collection of all the accounts of an enterprise. The Chart of accounts is a complete listing of the account titles and account numbers of all the accounts in the ledger. Posting is the recording in the ledger in the information contained in the journal. Cross-indexing is the placing of the account number of the ledger account in general journal and the general journal page number in the ledger account. A trial balance is a list of the accounts with the debit or credit balances prepared after journalizing and posting to determine the equality of debits and credits.