Accounting: Invoice and General Ledger Essay

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9 Steps in Accounting Process
1-Transaction Occurs
• Three most common transaction cycles o 1. Sales and cash receipts 2. Purchases and cash disbursements 3. Payroll
2-Prepare Document
• Internally or externally
• Timing of document preparation o Document prepared before transaction occurs- Issue order to buy goods or services (purchase order) receive order for a sale of goods or services (Customer purchase order) o Document prepared at same time transaction occurs- Receive goods or services (receiving report) Deliver goods (bill of landing/ shipping document) o Document prepared after transaction occurs- Send bill for goods or services sold (sales invoice) Receive bill for goods or services purchased (vendor invoice)
3-Record in Journal
• Every transaction occurring during an accounting period should be recorded in a journal
• Journal follows the requirement of a double entry recording system. Debits and credits for each transaction must be equal.
• General journal is used for mostly non-repetitive transactions such as error corrections, adjusting entries and transactions not appropriate for any special journals.
• Number and titles of journals for different companies vary with the accounting information needs and system design preferences of management.
• Typical journals and nature of transactions included o Sales journal (SJ)- revenue journal, cash sales journal, accounts receivable journal
 Typically recorded- sales or other revenue, sales return and allowance o Cash receipts journal (CR)- receipts register, cash journal
 Typically record all cash receipts o Purchases journal (PJ) acquisitions journal, purchase register, voucher register, accounts payable journal
 Typically recorded- all purchases of goods and services expect payroll – purchase returns and allowances may be recorded here or in a separate journal o Cash disbursement journal (CD) disbursement journal, check register, cash journal, payment record
 Typically recorded all cash disbursements maybe by check expect payroll o Payroll Journal (PR) payroll register,
 Typically record- all payroll disbursements (usually made by check) o General Journal (GJ) Miscellaneous Journal
 Error corrections, adjusting entries, closing entries, and other transactions not recorded in other journals
4-Post to Ledgers
• General ledger summarizes the transactions in journal by account balances.
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