Accounting Information Systems: The Processes and Controls, 2nd Edition

GENERAL LEDGER PROCESSES (STUDY OBJECTIVE 5)

Reexamine Exhibit 12-2 and notice that each of the processes described in this chapter and previous chapters feed data into the general ledger. The general ledger provides details for all the accounts within the chart of accounts. Recall from your accounting courses that the general ledger is the entire set of T-accounts for the organization. Each set of processes affects general ledger accounts. For example, sales and sales return processes affect the accounts receivable, sales, inventory, and cost of goods sold accounts. For manual accounting systems, the process in which transactions are posted to the general ledger is called the accounting cycle. Exhibit 12-5 is a summary of the processes in the accounting cycle.

Business processes in an organization consist of various accounting transactions. When an event occurs, the accountant must decide whether the transaction is a regular, recurring transaction. If the transaction is regular and recurring, it would be recorded in a special journal. Special journals are established to record specific types of transactions. For example, a sale to a customer would be recorded in a special journal called the sales journal. The sales journal would be the appropriate place to record all credit sales. The sales journal is designed to have columns to record the amount of the sale and the corresponding receivable. That is, one column exists for sales dollar amounts (a credit), and one column for accounts ...