Learning objectives
After completing this unit, you will be able to:
- Record transactions with balanced debits and credits
- Apply increase/decrease rules by account type
- Write complete journal entries with dates, memos, and references
- Post entries to the general ledger and compute running balances
- Prepare an unadjusted trial balance as an arithmetic checkpoint
Why this matters
Unit 1 taught what financial statements mean. Unit 2 teaches how transactions become ledger balances that feed those statements. Managers approve payments, revenue policies, and asset purchases in systems that generate journal entries. If you cannot read the entry behind a line item, you cannot catch misclassification before it hits the board deck.
Unit overview
Five lessons walk the recording cycle from double-entry logic through trial balance.
| # | Lesson | Core idea |
|---|---|---|
| 1 | Double-Entry Bookkeeping | Two-sided records keep A = L + E true |
| 2 | Debits and Credits | Normal balances and compound entries |
| 3 | Journal Entries | Chronological system of record |
| 4 | Posting to the General Ledger | T-accounts, controls, reconciliation |
| 5 | Preparing an Unadjusted Trial Balance | Debits = credits; not yet adjusted for accruals |
Connection to applied work
Build a one-month transaction log for a fictional startup in your Financial Accounting case analysis: at least eight events, journal entries, and a trial balance that balances. Unit 3 will add adjusting entries on top of this base.
Practice
- Record owner investment, credit sale, cash collection, and rent payment. Verify each entry balances.
- Explain why collecting AR (accounts receivable) does not create new revenue.
- List three errors a trial balance would not catch.
Knowledge check
- What is the difference between a journal and a ledger?
- When is a compound entry required?
- What does an unadjusted trial balance prove versus not prove?
- How does bank reconciliation connect to the GL cash account?
Key takeaways
- Double-entry is internal control, not optional mechanics.
- Debits and credits are labels; account type tells you increase versus decrease.
- Posting and reconciliation catch errors before statements publish.
- Unit 3 adjusting entries sit on top of the unadjusted trial balance you build here.
Unit assessment
Complete each section below. Score 80%+ on the quiz to finish this unit's assessment.
Exercises
Apply what you learned in this unit with structured practice.
Deliverable
300–500 word analysis document saved to your portfolio under ACC 101.
Rubric
- • Framework applied correctly (not just named)
- • Specific evidence from a real example
- • Clear recommendation with tradeoffs acknowledged
- • Professional writing with source citation
Deliverable
Problem solutions + 150-word reflection in your ACC 101 workbook.
Rubric
- • Attempted all practice items before checking answers
- • Honest reflection on errors
- • Identifies a specific review action
Model / spreadsheet
Build or extend a spreadsheet model tied to this unit.
Deliverable
Spreadsheet file with Inputs / Model / Outputs tabs · One-paragraph summary of key insight from the model · Screenshot or export saved to portfolio
Rubric
- • Assumptions stated explicitly
- • Logic is auditable (formulas or steps visible)
- • Output answers a specific business question
- • Sensitivity or scenario considered
Knowledge quiz
Check your understanding before marking the unit complete.
1. Under double-entry bookkeeping, every transaction must have:
2. Which account type has a normal debit balance?
3. A company pays $5,000 cash for January rent. Which journal entry is correct?
4. Harbor Retail sells $25,000 of goods on credit with COGS of $14,000. Which pair of entries is required?
5. An unadjusted trial balance with equal debit and credit totals proves:
6. To increase Accounts Payable (a liability), you would:
7. Accumulated Depreciation is an example of a:
8. A journal entry has debits of $9,000 and credits of $7,500. What must be true?