Widespread computerization has greatly modified the physical recordings of accounting systems and documentation. It has changed things to the point where the traditional journal, as well as various ledger forms, have almost completely disappeared from the accounting scene. However, the underlying need for some sort of journal/ledger structure has not been lessened, and the analysis of business transactions in the form of old fashioned journal entries will be an important tool when learning how to become a CPA. In a later entries I promise to cover and discuss various computer software and how it can be used in businesses in a variety of ways.
When a transaction occurs, it must somehow be “recorded,” usually as a whole, as an entry in some sort of business diary so that, in at any future date when the information is needed, interested parties may refer back to the details of the transaction, in an accounting form, when necessary. A given journal entry can be very simple, and the same entry, with varying dollar amounts, may be recorded many times daily; another journal entry may be complex, as when a transaction involves changes in several financial aspects of the business. Actually, a complete journal entry always consists of two or more entries that are also to be recorded in the accounting ledger.
Accounting can be a very rewarding creative career. Although it seems there are many tedious parts of becoming a CPA, it can actually be surprisingly creative. Tomorrow we will explore more creative avenues to break up the monotony.