University of San Diego - BUSN 1001Toturial 2 questions with solution

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BUSN1001 BUSINESS REPORTING AND ANALYSIS Tutorial 2 questions Chapter 4: Business transactions 4.10 Both the journal and the ledger can be used to record a large number of transactions. Differenti... ate between financial record-keeping in the journal and the ledger. A journal is a book which records each business transaction shown on the source documents in chronological order. An entity may record their transactions in separate journals for transactions that occur frequently. For example: entities which deal mainly in cash will have a cash receipts journal and cash payments journal. An entity dealing with credit will also have a credit sales and credit purchases journal. A ledger is an account that accumulates all the information about one item in the accounting reports, e.g. sales, cash. It is often prepared using the summarised information from the journals. For example: if you used special journals to record similar transactions such as cash receipts or cash payments then you would post the totals from these journals to the ledger accounts. There will be a separate ledger account for each item affected by the transaction and each account will have a debit side and a credit side. The advantage of recording in the ledger is that it summarises all the transactions affecting one account e.g. Wages [Show More]

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