I\'ve been thinking about our method of recording entries. It seems that it%u201

Question

I've been thinking about our method of recording entries. It seems that it%u2019s inefficient.

Marc: In what way?

Kelly: Well%u2014correct me if I'm wrong%u2014it seems like we have unnecessary steps in the process. We could easily develop a trial balance by posting our transactions directly into the ledger and bypassing the journal altogether. In this way we could combine the recording and posting process into one step and save ourselves a lot of time. What do you think?

Marc: We need to have a talk.

What should Marc say to Kelly?

Explanation / Answer

"Kelly, the important thing about the general journal entries is that they tell a story of what happened in the transaction. Without the journal to link to, the ledgers would not be linked, and thus, it would just show many changes in an account with only the date to go by. With the use of the general journal and the "post ref" column, we can link any changes in the general ledger to a journal entry in the general journal and find out what happened. For example, a credit to the accounts payable ledger is not going to tell us much, but if we follow this entry back to the general journal, perhaps we will see that it was accompanied by a debit to equipment. All of the steps are necessary because they do two things for us: they ensure that we have a sufficient amount of data to do other accouting functions and the records help us to find any errors in the future."

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