![]() Expenses: These are the costs incurred by a company to generate revenue.Revenue: This is the income generated by a long term care provider through its normal business activities.Owner’s equity: This is the worth of a company after the liabilities are deducted from the assets.Liabilities: This refers to the money that a business owes to other entities, including suppliers, banks, and shareholders.Assets: These are items of value owned by a long term care business, including cash, inventory, and equipment.In the financial suite of nursing home software, one will find five different types of general ledger accounts:Īssets are items of value owned by a long term care business and they include cash, inventory, and equipment. In the context of long term care, the nursing home software system will contain a general ledger program that relieves the financial team of the burden of manually posting transactions to the appropriate ledger accounts and preparing financial statements. So what is a general ledger? It is a record of all financial transactions that have been made by a business, including those not yet posted to journals or other subsidiary accounts. Now, with the invention of computerized general ledger programs, double-entry bookkeeping is no longer done manually. This made it possible to see both sides of every transaction, maintain balanced books, and provided a clear trail in case of audits. Debits were entered on the left side of the ledger and credits on the right. If you would like to see what it looks like to move journal postings into a general ledger in Excel, watch this additional video.Before computers were commonplace, accountants had to manually record financial transactions into a physical general ledger using double-entry bookkeeping, where transaction is recorded in at least two accounts. Double-entry bookkeeping is not a guarantee that no errors have been made-for example, the wrong ledger account may have been debited or credited, or the entries completely reversed. It follows that the sum of debits and the sum of the credits must be equal in value. If at any point the sum of debits for all accounts does not equal the corresponding sum of credits for all accounts, an error has occurred. The accounting equation serves as an error detection tool. When posting the general journal, the date used in the ledger accounts is the date the transaction was recorded in the journal, not the date the journal entry was posted to the ledger accounts. The choice is a matter of personal taste. Postings can be made (1) at the time the transaction is journalized (2) at the end of the day, week, or month or (3) as each journal page is filled. Posting is always from the journal to the ledger accounts. Accounts Payable is a liability account and Design Services Revenue is a revenue account but both accounts increase with a credit and decrease with a debit. Notice in these ledger examples that Cash is an asset and a debit increases an asset and a credit decreases an asset. Below is an example of what the T-Accounts would look like for a company. The general ledger is a compilation of the ledgers for each account for a business. The ledger for an account is typically used in practice instead of a T-account but T-accounts are often used for demonstration because they are quicker and sometimes easier to understand. Remember – a ledger is a listing of all transactions in a single account, allowing you to know the balance of each account. After transactions are journalized, they can be posted either to a T-account or a general ledger. If you credit an account in a journal entry, you will credit the same account in posting. If you debit an account in a journal entry, you will debit the same account in posting. When you post, you will not change your journal entries. ![]() The good news is you have already done the hard part - you have analyzed the transactions and created the journal entries. As stated earlier, posting is recording in the ledger accounts the information contained in the journal. ![]() The video provides a clear description of where in the accounting cycle posting occurs. The carrying out of these instructions is known as posting. We have covered a lot of new words and concepts in this chapter, this video gives you a preview of what happens next when we organize the journal entry information:Ī journal entry is like a set of instructions. ![]()
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