TOPIC NAME

Journalizing, Posting and Trial Balance

DATE

CUES NOTES

Journalizing  is the process of recording the result of accounting analysis.

 Every business activity is analyzed to determine if there is an
impact to the accounting equation. When there is an effect to
the entity's assets, liabilities, equity, income or expense, then such
business activity warrants a journal entry.

To journalize, one can follow these inquiries:

1. What elements are affected by the business transaction? (assets,

liabilities, equity, income or expense)
2. What is the effect to each of the element? (increase or decrease)
3. What is the monetary value of each of the effect? (in terms of
Philippine Peso)
4. What are the debits and the credits? Use the guide below:

For example, On March 1, 2020, the Company purchased a machine with a

total cost of P300,000 paying P100,000 are issued a promissory note for the
balance.

1. What elements are affected by the business transaction? (Answer:

asset (machine and cash) and liabilities (note payable))

2. What is the effect to each of the element? (Answer: asset increase for

machine, asset decrease for cash and liabilities increase for note
payable)

3. What is the monetary value of each of the effect? (Answer: machine

P300,000, cash P100,000 and notes payable P200,000)

4. What are the debits and the credits? (Answer: machine debit for
P300,000, cash credit for P100,000 and liabilities credit for P200,000)

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 So, the journal entry will be:

Posting

Chart of Accounts  Entities maintain a

 Chart of Accounts - where all assets, liabilities, equity, income and

expense accounts are listed.

Accounts used in journalizing should be found in the Chart of

Accounts. Journal entries will be posted to the Accounts.

If the account is debited in the journal entry, then it will also be debited
Ledger
in the ledger.

A Ledger is a summary of all accounting entries for each account in

the Chart of Accounts.

Example of a ledger is:

Trial Balance

 is the summary of all the balances of all the entity's ledger.

A Trial balance is the summary of all the balances of all the entity's ledger. As
shown in the example above on posting, the ledger ending balance of bank
account is P75,000, sales and purchases is P100,000 and P25,000,
respectively. Therefore, these balances will be summarized in a trial balance,
similar to that below:

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 The main test of accounting is the analysis of business transactions.
Journalizing, posting and preparation of trial balance is just a procedural step
that most computers can instantly perform.

SUMMARY (Brief summary of notes highlighting main ideas in your own words)

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