Journal Entries Assignments Help

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Journal Entries Assignments Help

Journal entries are the source document from which financial data that pertain to the transactions of a business are recorded both on the debit and credit sides of a journal. Hence, the journal is in a balance as the debits equal credits. At the time of an audit, in particular, journal entries are the source of any transaction that the auditors can drill down to. In other words, because of journal entries, there is an audit trail which is extremely crucial. Journal entries are an analytical tool as well. What sort of effect transactions may have on the financial condition of a business can be analysed through journal entries.
With journal entries, the accounting cycle begins. Journal entries are a system of accounting through which business transactions are recorded. Moreover, journal entries reflect the events related to the transactions. With the occurrence of recurring business events in the entire accounting period, journal entries are a part-and-parcel of the general journal. The accounting equation is a reflection of the change in events of a business. When a new vehicle is purchased with cash, for example, the cash account balance decreases or is credited and the vehicle account balance increases or is debited.
The three steps to making a journal entry are:

  • Identifying transactions
  • Analysing transactions
  • Journalizing transactions

Identifying transactions
First and foremost a business transaction ought to be recognizable. Without any knowledge of transactions occurring they cannot be recorded.
Analysing transactions
Once the financial impact and effect that an event may have had on the accounting equation are identified and acknowledged, the event ought to be analyzed to find out how a particular transaction could have altered the accounting equation. To exemplify, when the company purchases vehicle cash changes hands but since both are assets the fundamental equation remains unchanged. Both the assets account balances increased and decreased, the amount is the same. However, a financial transaction did occur with cash transferring into a vehicle.
Journalizing transactions
Once the identification and analysis of a business event are a reality, recording the event is a possibility. Entering financial data through a journal entry in the general journal involves a debit in one column and a corresponding credit in the other. With this double entry, any changes in the accounting equation are analyzed.
There are far too many business transactions that accountants usually put in appropriate categories. Hence separate journals are prepared based on the nature of the transactions. A Vehicle, for example, is purchased with cash and the appropriate journal to record the transaction would be cash disbursements journal.
Special Journals
The most widely used journal to record transactions in the general journal. However, businesses may need special journals that would suit their business process in general and particularly the related transactions. Some transactions may be recurring and variable in nature and therefore, they may need grouping to form a special journal. The different types of special journals are as under:

  • purchases journal
  • cash receipts journal
  • cash disbursements journal

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