Classifications of Business Transactions

In understanding accounting, you need to be very clear about which classification of business transaction you’re looking at. Businesses are profit-motivated, so one basic type of transaction is obvious [more…]

Accounting: Examining Both Sides of Business Transactions

The accountant’s job is to capture all the transactions of the business, determine the financial effects of every transaction, record every transaction in the business’s accounts, and from the accounts [more…]

The Three Types of Sales Transactions

The effect that making a sale has on a business’s financial condition depends on the type of sales transaction that's made — that is, when the cash is collected from the sale When a business sells a product [more…]

How to Develop Entries for the General Ledger

Because your business’s bookkeeping transactions are first entered into journals, you develop many of the entries for the General Ledger based on information pulled from the appropriate journal. [more…]

How to Post Entries to the General Ledger

After you summarize the journals for your business and develop the entries you need for the General Ledger, you post your entries into the General Ledger accounts. When posting to the General Ledger, include [more…]

How to Adjust for General Ledger Errors

The bookkeeping entries that you make in a General Ledger aren’t cast in stone. If necessary, you can always change or correct any errors with what’s called an adjusting entry. [more…]

Tracking Incoming Cash with the Cash Receipts Journal

The Cash Receipts journal is the first place you record incoming cash for your business. The majority of cash received each day comes from daily sales; other possible sources of cash include deposits of [more…]

Following Outgoing Cash with the Cash Disbursements Journal

The Cash Disbursements journal is the first place you record cash that goes out of the business and used to pay bills, salaries, rents, and other necessities. The Cash Disbursements journal is the point [more…]

Using a Sales Journal to Record Non-Cash Transactions

The Sales journal is where you initially record transactions for sales made by store credit (non-cash transactions). Each entry in the Sales journal must indicate the customer’s name, the invoice number [more…]

How Bookkeepers Track Purchases with the Purchases Journal

Purchases of products to be sold to customers at a later date are a key type of non-cash transaction, recorded in a business bookkeeper’s Purchases journal. All businesses must have something to sell, [more…]

Preparing a General Journal for Miscellaneous Transactions

Bookkeepers can prepare a general journal for miscellaneous transactions that don’t fit in one of the four main journals for a business (Cash Receipts, Cash Disbursements, Sales, and Purchases). If you [more…]

Bookkeeping: Posting Journal Information to the Appropriate Accounts

When bookkeepers close their books at the end of the month, they summarize all the journals — that is, they total the columns and post the information to update all the accounts involved. [more…]