Flow of information in an accounting system

  • Journal entries (25):
    • Record any transaction showing which accounts are changed and by what amount 
    • General journal (26)
      • Listing of all journal entries
  • General ledger (27)
    • Sort entries in general journal 
  • Initial trial balance 
    • Show balance in each account at the end of each accounting period 
  • Adjusted trial balance 
    • If any adjusting entries needed → recorded in adjusted trial balance 
  • Financial statements 
    • Account balance from adjusted trial balance is presented in financial statement 

Journal entries → general ledger → initial trial balance → adjusted trial balance → financial statement