Introduction

Chapters 1 and 2 built the foundation: what accounting is, and the theory base — the principles and concepts — that guide how transactions get recorded. Both of those chapters made one thing clear about the accounting process itself: it involves identifying and analysing business transactions, recording them, classifying and summarising their effects, and finally communicating the results to everyone who has an interest in the information.

This chapter is where that process is actually put into practice, step by step. The first step is identifying which transactions need to be recorded and preparing the source documents that provide evidence for them. From there, transactions are recorded in the journal — the basic book of original entry — and then posted to individual accounts in the ledger, the principal book of accounts.