Accounting transactions can appear complicated to the business owner or those new to the record-keeping and accounting field. Generally accepted accounting principles, or GAAP, require that businesses and accountants use the double-entry method for accounting for transactions. Transactions are transferred from the general journal and other accounts to the general ledger. The general ledger is then used to provide information found in the income statement and balance sheet. To cut down on time constraints, finding a method for summarizing transactions and transferring them to the general ledger is recommended.
Generally speaking, the sooner you summarize the transaction that will go into the general ledger, the better. The reason for this is that the entries recorded in the general journal in a chronological fashion need to be transferred as accurately as possible. The more time that lapses between the original entry and the time you transfer it to the general ledger, the more potential for error there is.
The content of your summaries can be anything that makes sense within the context of general journal and ledger entries. One important thing to remember is that the entry needs to accurately reflect the reason that the transaction took place. A one sentence summary will generally suffice, but on occasion you may need to use more than sentence to accurately reflect the transaction. You can always shorten the entry from general journal or other sources.
Shortening the original entry is probably the fastest method of summarizing the statement that you post in the general ledger. If your general journal entry was two sentences long, you may be able to shorten it to a compound sentence in the general ledger. You may even be able to go so far as to narrow down the entry to a few key words and eliminate any unnecessary wording in the process. For instance, an entry that originally read "payment to accounts receivable made by John Smith company on 12-1-11 for cost of xyz goods" could be shortened to "acct. rec. John Smith, 12-1-11, xyz."
Another way to eliminate some of the work associated with making the transfer from the general journal or another source to the general ledger is to do so using software programs. For instance, companies have accounting software packages that allow you to instantly transfer the information from one place in your accounting records to another. As long as you record the information electronically as you receive it, you can make the transfer contemporaneously with the original entry an not have to worry about shortening the entry to save time or space.
Jared Lewis is a professor of history, philosophy and the humanities. He has taught various courses in these fields since 2001. A former licensed financial adviser, he now works as a writer and has published numerous articles on education and business. He holds a bachelor's degree in history, a master's degree in theology and has completed doctoral work in American history.