Complete Overview of How to Make a Big Book

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The Big Book (Genereal Ledger) is one part of the Accounting Cycle. Technically, the Big Book is a book that contains a collection of historical transaction data contained in the General Journal and Special Journal. Actually, the way to make a Big Book is fairly simple. However, this will be difficult when a business has a business volume that is not small.

The ledger displays the history of transactions and financial balances in an accounting period. At the end of the period, the Ledger serves as a source of data for creating the company’s Financial Statements.

Account in General Ledger

The complete list of accounts that appear and are used in General Journals and ledger entries is called the Chart of Accounts (CoA). In the Big Book, each active account from the CoA list is neatly arranged. These accounts are numbered sequentially according to the type of account itself. For example, because cash, accounts and inventory accounts are part of Current Assets, generally each of these accounts is given a starting number “1”. Then for accounts such as buildings, vehicles, and the accumulated depreciation that are part of Fixed Assets are generally given the initial number “2”, and so on.

Each account has a balance value that can go up or down when a transaction occurs. The account summary in the ledger shows all transaction activities for a period that affect the balance value of each account. Or, “Is sales revenue greater than expenses?

T-Accounts in Ledgers

The T-Account helps the Big Book reader to see a summary of transactions that occurred and the value of the final balance of a period in one account. Here’s a simple example of a T-Account for a Cash Cash account:

Date

Account 1001: “Cash Cash” Balance
Debit

Credit

Jan 1 2019

– –
7,000

January 15, 2019

5,000 1,400
10,600

Jan 21 2019 9,000 –
19,600

Jan 31 2019 – 3,500
16,100

As mentioned earlier, each account has its own basic properties related to recording Double Entry – recording debit and credit. The Cash Cash Account above is one part of the Asset account. Which is where the Asset account has a normal nature or balance in the debit position. Therefore, every debit transaction related to a Cash account occurs, it will add to the value of the Cash balance itself. Conversely, if there are credit transactions related to a Cash account, then it will reduce the value of the Cash balance itself. The following is a complete list of the nature or normal balance of each account in the Ledger and Financial Statements:

Account name

Debit Balance

Credit Balance

Assets (Current & Permanent)

increase

reduced

The liability

reduced
increase

Equity

reduced
increase

Income

reduced
increase

Cost / Expense

increase
reduced

How to Make a Big Book: Journal Entry
Before entering Journal entries, assume PT Hujan has the following CoA list:

PT Rain’s Chart of Accounts

Account Number

Account name

Account Category

1001

Cash Asset Cash
1002

Accounts receivable
Asset

1003 Inventory
Asset

1004
General Equipment

Asset

2000

Accounts payable

The liability

4001

Sales revenue
Income

5001 Cost of Goods Sold (COGS)
Cost

6001

General Equipment Expenses
Cost

Example of PT Hujan Journal Entry for December 1 and 2 2018

On December 1, 2018, PT Hujan sold its merchandise to two customers on credit. The first customer purchases PT Hujan products with an item value of Rp 4,000,000. Whereas the second customer purchases PT Hujan products with an item value of Rp 3,500,000. PT Hujan then sent goods ordered by the two customers on December 2, 2018. Following is the entry entry:

PT Rain
General Journal in December 2018
Credit Debit Account Date
01-Dec-2018

01-Dec-2018

02-Dec-2018

1002 Trade Receivables
4001 Sales Revenue

1002 Trade Receivables

4001 Sales Revenue

5001 COGS

1003 Inventory

4,000,000

3,500,000

7,500,000

4,000,000

3,500,000

7,500,000

Example of PT Hujan Journal Entry for December 5, 2018
On December 5, 2018, PT Hujan bought office equipment on credit with a transaction value of Rp1,500,000.

Credit Debit Account Date
05-Dec-2018 1004 General Supplies
2000 Accounts Payable

1,500,000

1,500,000

Example of PT Hujan Journal Entry for December 15, 2018
On December 15, 2018, PT Hujan received payment of credit sales made by the first customer on December 1, 2018 before. Plus PT Hujan paid off the debt for the purchase of office equipment conducted on December 5, 2018.

Credit Debit Account Date
15-Dec-2018

15-Dec-2018

1001 Cash Cash
1002 Trade Receivables

2000 Accounts Payable

1001 Cash Cash

4,000,000

1,500,000

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