Managing a business includes recording entries in an accounting journal. Accounts and general ledgers are used to record all types of financial transactions. Any professional in Oklahoma can maintain a journal with basic knowledge of how the accounting process works.
Recording entries in accounting journals
An accounting journal consists of written listings of business transactions. A general journal entry contains the type of transaction, date, reference number and the amount of the debit or credit.
A debit, which is recorded on the left, is an increase in a current asset. Examples of debits are cash and accounts receivable. A credit, recorded on the right, is added when the income increases. Credit includes liabilities like accounts payable.
At the end of each type of transaction is a total. The journal is balanced when the total of the debits equals the total of the credits. An unbalanced journal creates an unbalanced trial balance and an inaccurate balance sheet.
Making specialized entries
Accountants use special journals to record specific types of financial transactions. The most frequent versions are sales and purchases journals. A cash receipt journal is used to record payments made with cash. The accountants gather information from sales receipts. This journal is used to review the business’s cash flow. A cash payments journal is the recording of expenses made with cash.
The average business in any state makes dozens of transactions and earns approximately $1,000 each day. An accounting journal is used to record every financial transaction to track where the money is spent and how much the company is earning. Accountants use different types of journals to track business purchases, sales and cash flows. In the end, all of the information is added to the general ledgers and used to analyze the company’s financial status.