Avoid Floating Journal Entries.
Question.
If you had to take a multiple-choice question test on the game of chess, without the benefit of a chess board during the test, would you remove the chess board while studying, or would studying with the chess board be a better use of your time? ? ?
What are floating journal entries and why avoid them?
Floating journal entries are journal entries that are not connected to anything, not connected to a general ledger, a trial balance, financial statements, the accounting equation, or some other format of the double entry accounting system.
Don’t get us wrong, floating journal entries have their place, and should be used when necessary, but they are used way too often during study time when we could be applying much more efficient methods of study.
Floating journal entries are often the result of limited space, limited resources, or limited information in book problems. When faced with these challenges we must use floating journal entries, but we should look for ways to study in a better format.
Explaining an accounting transaction with a floating journal entry is like explaining a chess move by holding up one chess piece without the chess board and describing how the chess piece moves on the board. If we can visualize the board, we can comprehend the move and the explanation, but nobody learns chess by imagining the board. We learn chess by doing, by moving the peace’s, and by observing the results on the entire system. Even if we were to be tested on chess with a multiple-choice test that has no board, we would not study for the test by eliminating the board. Instead, we would work with the chess board so much that it becomes something we can visualize. We do this through doing.
A floating journal entry is similar to explaining accounting without using the board. When learning chess, we do not assume that we learned the chess board in chapter one and we can now move onto other things because all things related to chess have to do with the board. The same is true of accounting. The board we use will be a trial balance.
We should look for problems that use the trial balance because this will maximize our study time by allowing us to fully engage with a problem and see how it works, rather then memorizing journal entries without fulling understanding their purpose or effect on the financial statements.
For more accounting information see accounting website.
http://accountinginstruction.info/
