An audit trail allows an individual to track a transaction from the journal entry to the general ledger through to the financial statements. The audit trail can also find all the transactions that comprise the dollar amount for each account listed on the income statement and balance sheet. Your team has been assigned the duty to diagram the audit trail for your company. In your diagram, show several transactions and how they would be tracked from the journal entry to the financial statement and back to the journal entry.

To diagram the audit trail for your company, follow these steps:

1. Start with the journal entry: A journal entry is the initial record of a transaction in the accounting system. It includes the date, accounts involved, amounts, and a brief description. For example, let's consider a sale of goods on credit. The journal entry may be recorded as follows:
Date: [date]
Accounts Receivable [debit]
Sales [credit]

2. Journal entry to general ledger: The journal entry is then posted to the general ledger, which is a collection of all the accounts maintained by the company. Each account has a separate ledger and contains details of all transactions related to that account. For our example, the accounts receivable and sales accounts in the general ledger would show an increase in their respective balances.

3. General ledger to trial balance: At the end of an accounting period, all the account balances are summarized in a trial balance. This step helps ensure that the total debits equal the total credits, ensuring accuracy in recording transactions.

4. Trial balance to financial statements: Next, the trial balance is used to prepare the financial statements, including the income statement and balance sheet. The income statement shows the company's revenues, expenses, and net income or loss. The balance sheet provides information about the company's assets, liabilities, and equity.

5. Financial statements back to trial balance: The financial statements are created based on the trial balance. If any adjustments are necessary while preparing the financial statements, they are made on the trial balance, which ensures that the financial statements accurately reflect the company's financial position.

6. Trial balance back to general ledger: If adjustments were made to the trial balance, they are recorded in the general ledger to update the balances for the next accounting period.

7. General ledger back to journal entry: In case of any errors or adjustments, the general ledger may be adjusted accordingly, and the changes are reflected back in the journal entry. This completes the full cycle of tracking a transaction from the journal entry to the financial statements and back to the journal entry.

Remember, this is a simplification of the process, and real-life scenarios might have additional steps and complexities.

Creating a diagram to illustrate the audit trail in your company can be a helpful way to visualize the process. Here's a step-by-step guide on how you can approach creating the diagram:

1. Start by identifying the key components of the audit trail:
- Journal Entries: These are the initial records of transactions, including the date, accounts involved, and amounts debited or credited.
- General Ledger: The general ledger is where all the journal entries are posted to individual accounts.
- Financial Statements: These statements (such as the income statement and balance sheet) present the summarized financial data for a specific period.

2. Choose a transaction to include in your diagram:
- Select one transaction that involves multiple accounts and can be tracked through the audit trail. For example, consider a sales transaction involving revenue, accounts receivable, and cost of goods sold.

3. Determine the journal entry for the selected transaction:
- Define the journal entry based on the specific transaction. For a sales transaction, it might include debiting accounts receivable and crediting revenue.

4. Show how the journal entry is recorded in the general ledger:
- Create a line connecting the journal entry to the corresponding accounts in the general ledger. For instance, link the accounts receivable and revenue accounts to the journal entry.

5. Illustrate how information from the general ledger is used on financial statements:
- Draw lines connecting the accounts affected by the journal entry to their respective categories on the income statement and balance sheet. For example, link revenue to the income statement and accounts receivable to the balance sheet.

6. Complete the loop back to the journal entry:
- Emphasize the loop back to the journal entry, showing how the financial statement amounts ultimately tie back to the journal entry. This loop highlights the completeness and accuracy of the audit trail.

7. Repeat the process for other transactions:
- Continue the diagram to include several other transactions, repeating steps 3 to 6. This will help illustrate how different transactions flow through the audit trail, from journal entry to financial statement and back.

Remember to clearly label each component in the diagram and provide concise explanations where necessary to enhance understanding.

Note: The specific design and format of your diagram may vary based on your company's unique processes and requirements.