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4 min 17 sec
0:00
Where entries live
0:24
The journal
0:41
Maya's March
1:23
The ledger
2:30
The audit trail
2:52
Posting in Beeswax
3:23
Recap and quiz
Accounting 101
·
Foundations
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Episode 4
The Journal and the Ledger
(Two books. Same numbers. Different jobs.)
Maya's March, first in date order, then sorted by account. How the journal and the ledger hold the same entries for different jobs, and what posting means.
journal
general ledger
posting
audit trail
Transcript
0:00
Maya's second month is in the books. Well. It's in a journal. Which is sort of the same thing, and sort of isn't.
0:09
Today: where accounting entries actually live. The journal, and the ledger.
0:16
Two books. Same numbers. Different jobs. Bear with us.
0:24
The journal comes first. It's every entry, in the order it happened. Date, accounts, debit, credit. Nothing clever. Just the facts, in order.
0:34
Think of it as your camera roll. Everything's in there. Just try finding one particular photo.
0:41
Here's Maya's March.
0:43
The first of March. Rent, eight hundred. Debit rent, credit bank.
0:49
The fourth. She invoices the website. Four thousand. Debit trade debtors, credit services income.
0:56
The ninth. Software, on the credit card. Fifty. Debit software, credit the credit card.
1:03
The fifteenth. The freelance developer, twelve hundred. Debit contractors, credit bank.
1:10
And the twenty-eighth. The client pays. Four thousand. Debit bank, credit trade debtors.
1:17
Five entries. Every one balances. You'd expect nothing less by now.
1:23
Now, the question Maya actually cares about. How much is in the bank? The journal can tell you. But you'd have to read the whole thing, and add it up. Nobody wants that.
1:37
That's what the ledger is for. It takes the same entries, and sorts them by account. One page per account. The camera roll, sorted into albums.
1:47
Copying each line across is called posting. The debit goes to the debit side of its account. The credit, to the credit side. That's it. No new numbers. Just tidier.
2:00
Watch the bank account. It started the month at thirteen and a half thousand. Minus eight hundred for rent. Minus twelve hundred for the developer. Plus four thousand from the client.
2:12
Fifteen and a half thousand. And the ledger keeps a running balance, so the answer is just sitting there, at the bottom.
2:20
Trade debtors went up four thousand, then down four thousand. Zero. The most satisfying zero in accounting.
2:30
Every ledger line also remembers where it came from. The date, and the journal entry that created it. Accountants call that an audit trail. It's breadcrumbs, for grown-ups.
2:44
Put all the ledger accounts together, and you've got the general ledger. Which sounds like a military rank. It isn't.
2:52
In Beeswax, you don't post anything by hand. Save an invoice, an expense, or a bank transaction, and Beeswax writes the journal, and posts it to the ledger, in one go.
3:03
The ledger page shows each account on its own card. Date, description, debit, credit, and the running balance down the right.
3:13
And every line has a reference number. Click it, and you're straight back to the invoice or expense behind it. Breadcrumbs. Told you.
3:23
So. The journal is everything, in date order. The ledger is the same entries, sorted by account. Posting moves them from one to the other. And nothing gets added along the way.
3:37
Quick one. Maya's bank ledger starts a month at eleven and a half thousand. The month brings three thousand of debits, and one thousand of credits. What's the closing balance?
3:49
Have a think.
3:53
Thirteen and a half thousand. Debits add to an asset. Credits take away. Eleven and a half, plus three, minus one.
4:04
If that felt easy, good. It's supposed to, by now.
4:08
Next time: the trial balance. The moment of truth, where we find out if the books actually add up. Bring snacks.