Question

What should Marc say to Kelly?

The following discussion took place between Marc Bolli, the office manager, the office manager of Landmark Data Company, and a new accountant, Kelly Holt.

Kelly: I have been thinking about our method of recording entries. It seems that it is inefficient.

Marc: In what way?

Kelly: Well—correct me if I am wrong—it seems like we have unnecessary steps in the process. We could easily develop a trial balance by posting our transactions directly into the ledger and bypassing the journal altogether. In this way we could combine the recording and posting process into one step and save ourselves a lot of time. What do you think?

Marc: We need to have a talk.

Has Kelly forgot about the "audit trail"? Or, is she trying to describe an accounting software program?

Answer 1

Answer :

A business needs to keep track of its each and every transaction on the daily basis and thus comes in Journals .

Doing business requires a lot of transactions and each transaction has its importance in business because it leads to creation of either fixed assets or payment of day to day transactions like rentals , electricity etc .

Journals are books that record events on a regular basis and shows the specific accounts effected by the transaction.

Journal holds an importance in accounting over ledger as they are the original books , and should be given importance over ledger.

Ledgers take the entries made in the journal and tallies up all transactions affecting a specific account .If all the transations are recorded directly into the ledger and not journal , business will not be able to locate any discrepancy occuring in any account like if one forgets to report any transaction in ledger or wrong amount entered .

To avoid such problems there should be Audit Trail or an Proper Accounting Program & maintain proper books , it is essential that first the transactions are recorded in journal and then posted in ledger even though it may be time consuming and tiring .