Accounting transactions from source documents are recorded in a
a. ledger
b. cash flow statement
c. journal
d. profit and loss statement
The correct answer is c. journal.
The correct answer is c. journal.
To understand how accounting transactions are recorded in a journal, it's important to understand the process of accounting. When a business engages in financial transactions, it needs to keep track of those transactions for accurate record-keeping and reporting.
The first step in the accounting process is to identify and analyze the source documents. Source documents are the original records of a business transaction, such as invoices, receipts, purchase orders, or bank statements. These documents provide the necessary details about the transaction.
Once the source documents have been identified, the next step is to record the transactions in a journal. A journal is a chronological record of all financial transactions. It provides a complete historical record of a business's financial activities.
When recording a transaction in a journal, the accountant follows a specific format. Each entry in the journal includes the date of the transaction, a description of the transaction, and the amounts debited and credited. Debits and credits are used to record the increase or decrease in specific accounts based on the accounting equation: Assets = Liabilities + Equity.
After recording the transactions in the journal, the next step is to transfer the information to the ledger. The ledger is a collection of accounts that contains detailed information about each type of asset, liability, equity, revenue, and expense. The ledger provides a summarized view of all transactions related to a particular account.
Both the journal and the ledger are essential components of the accounting process. The journal records transactions in chronological order, while the ledger categorizes and summarizes the transactions into specific accounts. These accounts are then used to prepare financial statements such as the cash flow statement and profit and loss statement.
Therefore, the correct answer is c. journal, as accounting transactions from source documents are initially recorded in a journal before being transferred to the ledger.