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

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

Answer: (D)

Verified step by step guidance

1. Understand the concept of a journal in financial accounting: A journal is the initial book of entry where transactions are recorded in chronological order before being posted to the ledger.
2. Recognize the double-entry system: Each transaction is recorded as both a debit and a credit to ensure the accounting equation (Assets = Liabilities + Equity) remains balanced.
3. Identify the purpose of journal entries: Recording transactions in a journal provides a detailed and organized record of all financial activities, which serves as the foundation for preparing financial statements.
4. Clarify the process: Transactions are entered into the journal with specific details, including the date, accounts affected, amounts, and a brief description of the transaction.
5. Differentiate from other processes: Recording transactions in a journal is distinct from preparing financial statements, posting to the ledger, or summarizing account balances, as it focuses on the initial chronological entry of transactions.