Describe how accounts are used to record information about the effects of transactions? - Bzziii

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Describe how accounts are used to record information about the effects of transactions?








Every transaction is recorded in the original book of entry (journal) in order of their occurrence; however, if we want to know that how much we receive from our debtors or how much to pay to the creditors, it is not possible to determine at a single movement. Hence, we prepare accounts to know the position of business activities in the meantime.
There are some steps to record transactions in accounts:

Step 1: Locate the account in ledger,
Step 2: Enter the date of transaction in the date column of the debit side of Account.
Step 3: In the ‘Particulars’ column of the debit side of Account, the name of corresponding account is to be written
Step 4: Enter the page number of the ledger in the Journal Folio (J.F.) column of Account.
Step 5: Enter the amount in the ‘Amount’ column.
Step 6: Same steps are to be followed to post entries in the credit side of Account.
Step 7: After entering all the transactions for a particular period, balance the account by totaling both sides and write the difference in shorter side, as ‘Balance c/d’.
Step 8: Total of account is to be written on either side.



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