In my last article, I explained how to use a Cash Receipts Journal to collect transactions together before posting them to the General Ledger. Since the purpose of a subsidiary journal is to summarize similar transactions in order to decrease the number of entries in the general ledger, this article will discuss how to post the totals of the Cash Receipts Journal to the General Ledger.
Posting the Cash Receipts Journal to the General Ledger is Lesson 11 in the Authentically Ash Basic Bookkeeping Course.
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There are two types of transactions that take place on a frequent basis in a business or household, namely cash receipts and cash payments. We make use of two subsidiary books to summarize these cash transaction before entering them into the general ledger. The two subsidiary books are called the Cash Receipts Journal and the Cash Payments Journal. It stands to reason that the Cash Receipts Journal is used to summarize all the Cash Receipts of the business/household and the Cash Payments Journal is used to summarize all the Cash Payments of the business/household.
How to use a Cash Receipts Journal is lesson 10 in the Authentically Ash Online Bookkeeping Course. Please note that the $ sign below is a representation of money and not any specific currency.
In the past few lessons, I discussed the basic principles of handling transactions. With these basic principles, you will be able to manage the bookkeeping of your household or micro business. Over the next few lessons I am going to show you how to use proper ledger paper in your General Journal. I am also going to explain cash journals, posting transactions from the cash journal to the general ledger, balancing a general ledger and preparing a Trial Balance. Obviously these topics are quite vast, so I will be covering them over a number of articles.
Ledger Paper and Subsidiary Journals is Lesson 9 in the Authentically Ash Basic Bookkeeping Course. In this lesson I will explain how to use ledger paper in your General Journal. I will also explain what subsidiary journals are. At the end of this article you will find a free ledger paper template that you can download as a PDF.
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In business and in households, you may find that you will buy certain items, such as vehicles, property, equipment etc. on credit. In these circumstances, you will receive the item immediately, but you will pay for it at a later date. You may also pay it off over time. When money is owed to another business or person, you call that business or person a creditor.
In this lesson I will discuss how to handle credit purchases and credit payments in the general ledger.
How to handle creditors is lesson 8 in my Basic Bookkeeping Course. Please note that the $ symbol in all the examples below represents money. It does not represent a specific currency.
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In this lesson, I am going to explain how to balance the accounts of your general ledger, and I will also explain how to create an Income Statement for your household or business.
An income statement is an important accounting document. It allows you to calculate the profit or loss of your business (or household). In order to create an Income Statement, you will need to complete your General Ledger accounts for the accounting period. The accounting period is the time frame of your accounting documents. I usually create an Income Statement at the end of the month that contains all the incomes and expenses of the past month, and I also create an Income Statement for the entire financial year.
This is the seventh lesson in my basic bookkeeping course. Please note that the $ sign used below represents money and is not a symbol of any specific currency.
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The main objective of accounting is to provide information as financial statements that will be used to make decisions about the finances of the business (or household). In order to create the appropriate financial statements, you need a systematic way of recording transactions. An account is the place in the books of a business (or household) where the money value of transactions are collected and entered. It is normally collected in a book called a General Ledger.
How to make entries into ledger accounts is lesson 6 in my free online bookkeeping course. Please note that the $ sign is a representation of money in the examples below and is not indicative of a specific currency.
Accounts in a general ledger look like a capital T in shape. The lefthand side is called the debit side ad the righthand side is called a credit side.
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In this article, I am going to discuss the foundation accounting knowledge for recording financial transactions. The better you understand this foundation accounting knowledge, the easier it will be to continue with the later articles. I am going to use a service business as the example here, but I will discuss trading businesses in later articles. I will also translate this information into household bookkeeping like I always do.
Foundation Accounting Knowledge is lesson 5 in my free online bookkeeping course. Please note that the $ sign does not represent a specific currency in this article, but rather represents money in general. Therefore some of the amounts of money used in examples may appear unrealistic.
Foundation Accounting Knowledge – Definitions
Before we continue, I am going to define a few accounting terms and concepts you will need to be familiar with if you are not already familiar with them.
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The following business startup activities are necessary for businesses. I will discuss The Business Activity Cycle, then translate it for household use below.
The Business Activity Cycle is lesson 4 in my free bookkeeping course.
The Business Activity Cycle
The following diagram shows the basic business activity cycle. I will be giving a basic overview of the diagram below, but I won’t be going into detail about each step at this time. If you are running a trading business it is important to familiarize yourself with the business activity cycle, accounting entries are made for each day in the order shown below.
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In my last two articles I mentioned that the purpose of a business is to make a profit by satisfying human needs. If you are wanting to start a business, you need to carefully analyse the feasibility of the business before you get started.
I am not going to go into detail about how to decide if a business idea is feasible, but rather the practical steps that are taken, as far as money is concerned, when you start a business. I will start with the business knowledge, then translate it so that it applies to your household. I advise that you understand the business side as well as the household side.
Please note that I am using the $ sign to indicate money and this isn’t relating to any specific currency. Therefore some of the amounts of money used in the examples are unrealistic as they are simply examples.
Begin household bookkeeping is lesson 3 in my Free Online Bookkeeping Course
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I firmly believe that you should run your household like a business. There are a number of advantages to this including:
- You can separate emotional purchases from logical/strategic purchases more easily.
- You are more likely to keep the profit motive in mind while you run your household.
- If you run your household well, then you will progressively increase your standard of living in the same way that a business progressively grows over time.
- It encourages everyone in your household to contribute to the maintenance of your household, especially if they get a direct share of the household profits.
I’m going to begin this article by discussing a few universal decisions that need to be made before you start a business. I will then translate those same universal decisions into how to begin running your household as a business.
Run your household like a business is Lesson 2 in my Free Online Bookkeeping Course.
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