|<< Accounting Journals and Ledgers||How to Use Financials and
Ratios >>| This post is a quick overview of subjects covered in
more detail in other posts. I usually like to see a quick
version so I am trying to present that option to others as well.
The Double Entry Accounting System collects, organizes,
summarizes and reports on Financial Transaction data. Financial
Transactions: Exchanges of things of value. There are three
basic questions that must be answered for each financial
transaction, they are: - Question 1. How much money changed
hands? What is the value of this exchange? - Question 2: How was
the money used? What was either gained or paid for by this
exchange? - Question 3: Where did the money come from? What is
the source of funds in this exchange? - Answer 1: 3,000.00 -
Answer 2: Rent - Answer 3: Checking Account The answers for each
of the financial transaction questions are recorded in Journals.
Journals have a grid format with a varying number of columns but
to start, we’ll use three columns.