The Recording Process

Overview


The recording process is the process by which transactions that occur in a business are recording to the books. Transactions are initially recorded to a book called the journal, and then later moved from the journal to the ledger.

The journal is a collection of records that record the transactions that occur in the normal course of business. A transaction is any event that affects (by raising or lowering) the assets, liabilities or equity of a firm. Typically, a journal entry consists of an account id and a value. The value indicates how much to increase or decrease the referenced account.

T Accounts - Debits and Credits


Accounting was developed long before computer systems were invented. Transactions were recorded by writing them into a book. As such, it was often difficult to keep the books consistent, that is, no matter what transactions take place, the basic accounting equation must hold. Errors in entering transactions could cause the accounting equation to fail to hold.

In this system, certain practices were put into place in order to help make sure that errors did not occur, and were easy to catch and correct when they did occur. In particular

Assets
Cash
Accounts Receivable
Inventory
Liabilities
Equity
Revenues
Expenses

Transactions


Transactions posted to the journal show both the debits and credits that occur in the transaction, as well a description of the transaction.

2010-01-01
Cash
1000
Revenue
1000
To record payment for services

Chart of Accounts


The chart of accounts is a listing of all the accounts in the ledger. It maintains the account numbers, account names, and what type of account the account is. That is, whether the account represents an asset account, a liability, an equity account, revenues or expenses. 


100 – 199	Assets	Balance Sheet
200 – 299	Liabilities	Balance Sheet
300 – 399	Equity	Balance Sheet
400 – 499	Revenue	Profit & Loss
500 – 599	Cost of Goods Sold	Profit & Loss
600 – 699	Operating Expenses	Profit & Loss
700 – 799	Taxes Paid	Profit & Loss
800 – 899	Other Expenses	Profit & Loss


Posting


Posting is the process of transferring the items in the journal to the ledger

Journal Implementation


The following code demonstrates a simple implementation of a journal (as an array) and method of writing to the journal, that is, adding a new transaction to the journal. 


let journal = [];

journal.push([{
  id:'cash',
  value:100
}, {id:'revenue',
  value:100}
]);