General Ledger Example Grade 8: A Comprehensive Guide

In grade 8 accounting, students are introduced to the concept of a general ledger. The general ledger is a key component of accounting that helps track and summarize all financial transactions of a business or organization. It provides a detailed record of each transaction and helps create financial statements.

Source Documents

Before diving into the details of the general ledger, it's important to understand the source documents that serve as evidence for financial transactions. These documents include cheque counterfoils, duplicate receipts, and other relevant records.

The Role of the General Ledger

The general ledger acts as a central repository for all financial transactions. It records each transaction in a chronological order and provides a comprehensive overview of the financial health of a business.

Recording Transactions in Journals

To keep track of all transactions, they are first recorded in specialized journals such as the Cash Receipts Journal (CRJ) and Cash Payments Journal (CPJ). These journals help organize and categorize transactions before they are transferred to the general ledger.

Posting to the General Ledger

After recording transactions in the journals, the next step is to post them to the general ledger. This process involves transferring the summarized information from the journals to the respective accounts in the general ledger.

Example: Cash Receipts Journal

Let's consider an example to better understand how transactions are recorded and posted to the general ledger. In June 2012, Smart Shoe Repairs recorded cash receipts in their Cash Receipts Journal as follows:

• June Bank: CRJ $10,000
• June Total Receipts: CRJ $14,500
• June Bank: CRJ $4,500

According to the rule for posting the CRJ, the bank account is debited, and all other accounts are credited.

Example: Cash Payments Journal

In the same period, Smart Shoe Repairs also recorded cash payments in their Cash Payments Journal:

• June Bank: CPJ $1,000
• June Total Payments: CPJ $1,895
• June Bank: CPJ $350

For the CPJ, the rule is to credit the bank account and debit all other accounts.

Importance of Accurate Dates

When posting to the journals, it's crucial to ensure that the dates are correct. If posting a column total, the last day of the month is used. However, if posting from the sundries column, the actual date of the transaction should be used.

Conclusion

Understanding the general ledger is a fundamental aspect of grade 8 accounting. It provides students with the necessary knowledge to track and summarize financial transactions. By recording transactions in specialized journals and posting them to the general ledger, students gain a deeper understanding of the overall financial health of a business.