Recording Transactions

With sophisticated accounting software and inexpensive computers, it is no longer practical for
most businesses to manually enter transactions into journals and then to post to the general
ledger accounts and subsidiary ledger accounts. Today, software such as QuickBooks* will
update the relevant accounts and provide more information with a minimum of data entry.

*QuickBooks is a registered trademark of Intuit Inc. AccountingCoach LLC is not affiliated with
Intuit Inc. and does not receive any affiliate marketing commissions from Intuit.

In this section we will highlight how the accounting software will capture financial transactions
and then automatically update the general ledger and store the information for management's
future use.

Accounts payable
When accounting software is used to enter the invoices received from suppliers (vendor
invoices), the software will update Accounts Payable and will require that the account or
accounts that should be debited be entered as well. The accounting software's vendor files also
allow a company to prepare purchase orders, receiving tickets and to pay the vendors' invoices.

A company should have internal controls so that only legitimate invoices are recorded and paid.

Check writing
When the accounting software is used to write checks, the software will automatically credit the
Cash account and will require that another account be designated for the debit. An additional
benefit is that the amounts will move electronically and the account balances will be
automatically calculated with speed and accuracy.

Again, a company should have internal controls to ensure that only legitimate payments are
processed.

Sales on credit
When the accounting software is used to prepare a sales invoice for a customer who purchased
on credit, the customer's detail will be updated, the general ledger account Sales will be credited
and the general ledger account Accounts Receivable will be debited. Statements for each
customer and an aging of all of the accounts receivable can be printed with the click of a button.