Business Analysis with Microsoft® Excel, Second Edition

Understanding Journals

The basic flow of information about business transactions follows this sequence of events:

1. A business transaction occurs—for example, a sale, a purchase, a receipt of funds, or an expenditure of funds.

2. Information about the transaction is recorded in a journal. The journal usually retains the information about the transactions in chronological order: so, one record might contain data on a sale that took place on March 1, the next record might describe a purchase that was made on March 2, the next record might have data on a payment due on March 3, and so on.

3. Information about the transactions is copied (or posted) from the journal to a ledger. This ledger has different sections: one for each type of account, such as Accounts ...