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General Journals

Business Accounting Bookkeeping The Ultimate Accounting Refresher Course The Accounting Equation - The Basis of Double Entry Bookkeeping
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Transcript

Welcome back to this lecture. My name is Justin light from big numbers. And in this lecture I'm going to give you an overview of general journals or ledger accounts. So, we've previously talked about the Kenny equation, and that if you increase assets, they get debited, if they decrease they get credited. And the liability side, if they increase the credited, if they decrease the debited and the owner's equity, if it increases, it gets credited. And likewise, if it decreases, it gets debited.

Now, what we're going to be talking about is actually putting this in a slightly different format in the general journal format. And when we go through the case study on short, Phil automotive, we'll actually be doing a lot more of this in practice. So let's first talk about some of the components of the general journal. So First of all, we're going to have a column that's actually going to be the date column, which will actually be the date the transaction took place. We're then going to have a reference column. And what this reference number is, represents a chart of accounts.

So every single account on a balance sheet, and a profit and loss will have a reference number. So for example, the cash at bank account in this case, will always have the Count 100. Now I've just made up this number. In practice, this could be any number, but you always have a standard chart of accounts for every single balance sheet and profit loss account. And so in this example, the cash bank has a reference of 100, the sales revenue will have a reference of 500. And we then have the actual name of the account which which is really the reference number but in words, we actually understand what the count is for.

And then finally, you have a column for debit, which will go on the left hand side You'll have a column for credit, which will go on the right hand side. And as we've looked at in previous examples, this is the T account version of what looks like when you've got the debits on the left. And the credits on the right, this is a different format to what we're talking about here is general journals. And just one other thing to point out with general journals, what you should always do also is you should always have an aeration underneath the journal just so you understand what this particular transaction was for. And you can go into as much detail or as little detail as you like, but it's always good as a reference of best practice to to actually generate your journal journals. So we're now going to dig into the case study on short, Phil automotive, and we'll be getting into a lot of these debits and credits using the general journals.

And we'll see you in the next lecture.

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