O supplies an explanation of each transaction when

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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 6 / Exercise 41
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
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oSupplies an explanation of each transaction when necessary.oServes as a source for future reference to accounting transactions.oEliminates the need for lengthy explanations from the accounts.oMakes possible posting to the ledger at convenient times.oAssists in maintaining the ledger in balance because the debit(s) must always equal the credit(s) in each journal entry.oAids in tracing errors when the ledger is not in balance. LedgeroCollection of all accounts; loose leaf, bound, or computer memory formsoTwo general groups that accounts fall into:oBalance sheet accounts: assets, liabilities, and stockholders’ equity; Real Accounts – they are not sub classifications or subdivisions of another account;These are permanent accounts with values carried over from period to period.Permanent Accounts – balance is not transferred (closed) at the end of an accounting periodoIncome statements: revenues and expensesNominal accounts (“in name only”)- sub classifications of the stockholders equity account; These are zeroed out at the end of every period.Temporary accounts- temporarily contain revenue, expense, and dividend information that is transferred (or closed) to the Retained Earnings account at the end of the accounting period. oTrial Balance: sum of all credits and debits on the general ledger. They should match!Chart of Accounts
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Applied Calculus for the Managerial, Life, and Social Sciences
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Chapter 6 / Exercise 41
Applied Calculus for the Managerial, Life, and Social Sciences
Tan
Expert Verified
ocomplete listing of the titles and numbers of all the accounts in the ledger ocompared to a table of contents. oThe groups of accounts usually appear in this order: assets, liabilities, stockholders' equity, dividends, revenues, and expenses. oIndividual accounts are in sequence in the ledger. oEach account typically has an identification number and a title to help locate accounts when recording data. oThe important idea is that companies use some numbering system. ** See Word Document: Chart of AccountsAccounting CycleoSeries of steps performed during the accounting period (some throughout and some at end) that analyzes, records, classifies, summarizes, and reports useful financial information that is used to prepare financial statementsoTransaction must be JournalizedJournalizing is the process of entering the effects of a transaction in a journal. oThen information is transferred (posted) to proper accounts in ledgerPosting is the process of recording in the ledger accounts the information contained in the journal oEach business transaction affects two or more accounts in the ledger. oAlso note that the transaction date in both the general journal and the general ledger accounts is the same. oIn the ledger accounts, the date used is the date that the transaction was recorded in the general journal, even if the entry is not posted until several days later.

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