In a nutshell

2. Journalizing and posting transactions is a goal of special journals to make it easier. Journal entries are
created after examining the source document to determine whether or not a business transaction
occurred. To keep the accounting equation running, the total amount debited and total amount credited
must always be equal.

3. A journal entry records all of the impacts of a business transaction in the form of debits and credits
and it’s important to provide an explanation of the transaction.

4. Since each transaction is originally recorded in a journal rather than directly in the ledger, the
transaction must be put in a journal before it can be entered in ledger accounts.

5. The journal is always posted to the ledger accounts. Postings can be made when the transaction is
journalized, at the end of the day, week, or month, or when each journal page is completed. Cross-
indexing is the practice of putting the ledger account’s account number in the general journal and the
general journal page number in the ledger account.

6. The chart of accounts is a list of all the ledger accounts, together with their titles and numbers. It
defines what information will be included in the production of financial statements. This is the most
common order in which assets, liabilities, equity, dividends, revenues, and costs are stated.

7. A trial balance is created during the accounting cycle. It is typically completed after all of the journal
entries for the time have been recorded. The trial balance determines if a company’s debits and credits
are equal. It contains all ledger accounts, both general journal and special, and their debit or credit
balances in order to ensure that debits equal credits during the recording process.

8. A trial balance only checks the sum of debits against the sum of credits. If debits do not equal credits,
then the accountant or bookkeeper must determine why.

9. When an error is recognized, a correcting entry must be made. Then another trial balance is
performed.

10. A post-closing trial balance verifies the closure process’s accuracy. A post-closing trial balance
demonstrates that the books are in balance at the beginning of the next accounting period. The adjusted
trial balance differs from the post-closing trial balance.