Focus: General journal, general ledger, subsidiary ledgers, posting process.
Key Responsibility: Maintain journals and ledgers to ensure accurate, up-to-date financial records.
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Week 4 moves from understanding transactions to recording them in a structured system. Students learn how to use the general journal, post entries to the general ledger, maintain subsidiary ledgers, and prepare an introductory trial balance. This is the bridge between source documents (Week 3) and reconciliations (Week 5).
By the end of this week, students will be able to:
The general journal is the book of original entry. It records all financial transactions in chronological order, including the date, accounts debited and credited, amounts, and a brief description.
Students learn to convert information from source documents into properly formatted journal entries that will later be posted to the ledger.
The general ledger is a collection of all individual accounts used by the business. Each account shows a running balance and is used to build the trial balance and financial statements.
Key idea: the journal answers “What happened and when?” while the ledger answers “What is the balance of each account?”
Subsidiary ledgers provide detailed information for certain accounts, such as Accounts Receivable (by customer) and Accounts Payable (by vendor). The total of each subsidiary ledger must equal the balance in its corresponding control account in the general ledger.
Example: The AR subsidiary ledger shows individual customer balances; the AR control account in the G/L shows the total owed by all customers.
Posting is the process of transferring information from the journal to the ledger accounts.
Posting references (e.g., J1, G101) provide an audit trail between journal entries and ledger accounts.
Students learn to recognize frequent mistakes, such as:
These errors can often be detected through ledger review and preparation of a trial balance.
A trial balance is a list of all ledger accounts and their balances at a given date. It is used to verify that total debits equal total credits after posting.
Students see that a balanced trial balance does not guarantee that all entries are correct, but it is an important first step in locating errors.
Students start with sample source documents, prepare journal entries, and then post each entry to ledger accounts, updating balances as they go.
Students record invoices and payments by customer in a subsidiary ledger and verify that the total matches the AR control account in the general ledger.
Given a flawed set of ledger postings, students identify and correct errors, then prepare a corrected trial balance.
Students prepare complete journal entries for 20–25 transactions using information from a set of source documents.
Using their prior journal entries, students post all transactions to pre-formatted ledger accounts and calculate ending balances.
Students maintain an AR subsidiary ledger by customer and verify that the total equals the AR control account balance in the G/L.
Why do we need both a journal and a ledger? What risks would a business face if transactions were only kept in a journal and never posted to a ledger?
Week 4 teaches students how to turn raw transaction data into organized financial records. By mastering journals, ledgers, posting, and basic error detection, students build the core skills required to maintain accurate, audit-ready books.
In Week 5, students will build on these skills to perform bank reconciliations and further validate account balances.