Which of the following best describes the process of recording transactions in a journal?

• A. Preparing financial statements for external users.
• B. Summarizing account balances at the end of the period.
• C. Entering each transaction as a debit and a credit in chronological order.
• D. Posting transactions directly to the ledger without any initial record.

Answer: (C)

Verified step by step guidance

1. Understand the purpose of a journal: A journal is the first place where financial transactions are recorded. It serves as a chronological record of all transactions before they are posted to the ledger.
2. Learn the double-entry system: Each transaction is recorded as both a debit and a credit, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.
3. Recognize the importance of chronological order: Transactions are entered in the journal in the order they occur, which helps maintain an accurate timeline of financial activities.
4. Distinguish between journalizing and posting: Journalizing involves recording transactions in the journal, while posting involves transferring these entries to the ledger accounts.
5. Understand why the correct answer is 'Entering each transaction as a debit and a credit in chronological order': This describes the process of journalizing, which is the foundational step in the accounting cycle.