Question

The first step in recording a transaction in the journal is:

1) entering the debit side of the journal entry on the left margin and the credit side, which is indented to the right.
2) determining whether each account is increased or decreased by the transaction.
3) copying the information from the journal to the ledger.
4) specifying each account affected by the transaction and classifying the account by type.

Answer 1

The first step in recording a transaction in a journal is to assess each account's increase or decrease, informing which side to debit or credit. This is essential in the double-entry bookkeeping system before entering debits and credits in the journal and posting them to the ledger.

Step-by-step explanation:

The first step in recording a transaction in the journal is to determine whether each account is increased or decreased by the transaction. This is critical in understanding which side should be debited and which should be credited in the double-entry bookkeeping system.

Here is a simplified example of how this works: if a company incurs an expense, the expense account is increased with a debit, and depending on the nature of the transaction, another account, like cash or accounts payable, is credited. After identifying the accounts affected and the direction of the effect, you would then enter the debit and credit entries appropriately in the journal, with debits on the left and credits on the right. Eventually, these entries are posted to the ledger, where each transaction affects two or more accounts.