Week 1 Handin Assignment : Journal Entries
What are financial journal entries? Journal entries are transaction details that are captured on the day that the transaction is conducted in order to maintain accurate financial records. This is one of the basic accounting rules and it helps to ensure that all transactions are recorded as they occur and correct accounting information is maintained. Bragg, (2014) mentions some of the components that characterize a journal entry and mentions that it basically contains the following information: The date when the transaction took place
Particulars or description of the transaction
A column for Debit transactions
A column for Credit transactions
Journal entries are captured in a T-Account showing each transaction and the corresponding counter entry in the ledger. The transactions are classified as either Debit or Credit and the default presentation is that the Credit is listed on the Right hand side, the Debit is listed on the left hand side and the account description is on the extreme left. By following the dual entry book keeping practice, this helps to ensure that the accounts balance out at the end of the accounting period. The XYZ Ltd financial transactions for the month of January can be explained as detailed below followed by the journal entries in the T accounts below the explanation table. According to Atrill and McLaney (2011), the principle of debits and credit guide the basic the accounting equation in which assets are defined as the sum of liabilities and stockholder’s equity. To increase the assets, the debits have to be increased while debits are decreased simultaneously. For Liabilities, an increase requires the credits to be added while to reduce the liabilities, the debits are added to it. Jan. 1st
The invested funds £300,000, and immovable assets consisting of land £100,000 and building £250,000 were an expense for the shareholders so they are captured as debit items and their total value is a...
References: Bragg, S (2014), The GAAP Guidebook. 2014 Edition, Colorado: Accounting Tool LLC
Atrill, P. & McLaney, E. (2011) Accounting and Finance for Non-Specialists. 7th Edition, Harlow, England: Prentice Hall.
Lerner, J. (1994), Bookkeeping and Accounting. 3rd Edition, USA: McGraw-Hill
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