You have a part-time job as a bookkeeper at a local office supply store. The acc

Question

You have a part-time job as a bookkeeper at a local office supply store. The accounting records consist of a general journal and general ledger. The manager is concerned about efficiency and feels that too much time is spent on recording transactions. In addition, there sometimes is difficulty determining the amount owed to specific suppliers. The manager knows you are an accounting student and asks for your suggestions to improve the accounting function.

Write a memo to the manager describing how to increase efficiency and accuracy by using different accounting records.

Explanation / Answer

An accounting journal entry is the method used to enter an accounting transaction into the accounting documents of a trade. The accounting records are aggregated into the final ledger, or the journal entries is also recorded in a variety of sub-ledgers, which might be later rolled up into the general ledger. This know-how is then used to assemble economic statements as of the end of a reporting period.

There have got to be a minimum of two line items in a journal entry, although there's no higher restrict to the number of line objects that may be integrated. A two-line journal entry is often called a easy journal entry, while one containing more line objects is referred to as a compound journal entry. A manufacturer could use a satisfactory many journal entries in only a single accounting interval, so it's better to use a bigger quantity of simple journal entries than a smaller number of compound journal entries, with a purpose to clarify why the entries are being made. This is valuable when journal entries are being researched at a later date, and primarily when they are being reviewed by using auditors.

Whenever you create an accounting transaction, at least two bills are constantly impacted, with a debit entry being recorded towards one account and a credit score entry in opposition to the other account.

The totals of the debits and credits for any transaction must perpetually equal each and every other, in order that an accounting transaction is always stated to be "in stability." If a transaction weren't in stability, then it will not be feasible to create economic statements. As a consequence, the usage of debits and credit in a two-column transaction recording layout is the most most important of all controls over accounting accuracy.

In a smaller accounting environment, the bookkeeper could report journal entries. In a bigger company, a normal ledger accountant is mostly responsible for recording journal entries, thereby delivering some manage over the manner where journal entries are recorded.

Layout of the Journal Entry

At a minimum, an accounting journal entry must include the following:

The bills into which the debits and credit are to be recorded
The date of the entry
The accounting period where the journal entry will have to be recorded
The identify of the person recording the entry
Any managerial authorization(s)
A detailed number to identify the journal entry
whether or not the entry is a one-time entry, a ordinary entry, or a reversing entry.
It may be crucial to connect wide documentation to the journal entry, to show why it's being recorded; at a minimum, furnish a short description of the journal entry.
Exact types of Accounting Journal Entries

A reversing journal entry is one that is both reversed manually in the following accounting interval, or which is robotically reversed through the accounting application in the following accounting period.

A habitual journal entry is person who repeats in every successive accounting period, except a termination date is reached. This can be done manually, or can also be hooked up to run robotically in an accounting application procedure.

Unbalanced Journal Entry

If a journal entry is created where the debit and credit score totals aren't the same, this is called an unbalanced journal entry. If you happen to try to enter an unbalanced journal entry into a pc accounting system, the error-checking controls within the application will likely reject the entry. However, if you create an unbalanced journal entry in a handbook accounting approach, the influence will be an unbalanced trial balance, which in flip signifies that the steadiness sheet won't stability. The next journal entry is unbalanced; observe that the debit complete is lower than the credit score complete. In such instances, you have got to correct the underlying unbalanced journal entry earlier than you can obstacle financial statements.

Journal Entry Fraud

it is much more normal for accountants to commit fraud through the usage of journal entries than by means of the usage of such long-established transactions as recording provider invoices and creating purchaser invoices. The rationale is that these extra usual transactions have a procedure of controls constructed up around them that's designed to observe a variety of disorders. Conversely, there are fewer controls over journal entries, which makes it easier for anyone to create a fraudulent transaction. These transactions are primarily intricate to identify if the amount recorded is regarded immaterial, in which case auditors are not going to spot the transgressions.

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