07 — Portfolio
South Metropolitan Business Solutions
Accounts Administrator, full manual accounting cycle for June 2026. SMBS is a simulated business used for assessment in the Certificate IV in Accounting and Bookkeeping at South Metropolitan TAFE.
Every document below was prepared by hand, without accounting software. That is the point of it. Software hides the double entry behind a screen, so working manually is what makes the mechanics visible — why a transaction lands where it does, and what breaks when it doesn't. The four principles below run through all fourteen documents.
Principle 01
The Matching Principle
Expenses are recognised in the same period as the revenue they helped generate, regardless of when cash moves. A supplier invoice received in June for goods sold in June belongs to June, even if it is paid in July.
In practice this drives the accrual entries in the general journal: prepayments spread forward, accrued expenses brought back, and income received in advance held as a liability until earned. Without it, a strong cash month reads as a strong trading month, and the two are not the same thing.
Principle 02
Triple-Entry Recording
Every credit transaction is recorded three times, and all three must agree. First in the specialised journal as the book of original entry. Second, posted individually to the customer or supplier account in the subsidiary ledger. Third, posted in total to the control account in the general ledger.
The third entry is the control. If the sum of the subsidiary ledger accounts does not equal the control account balance, something was posted twice, missed, or entered against the wrong party. The structure catches the error before it reaches the trial balance.
Principle 03
AR and AP Subsidiary Ledgers
The general ledger carries one Accounts Receivable figure and one Accounts Payable figure. That is enough for the balance sheet and useless for running the business.
The subsidiary ledgers break those totals down by individual debtor and creditor, which is what makes aged receivables analysis, credit limit monitoring, supplier statement reconciliation, and payment scheduling possible. Chasing an overdue account requires knowing which account is overdue, by how much, and for how long. The control account tells you the total is right; the subsidiary ledger tells you what to do about it.
Principle 04
Reversals and Adjustments
Errors and returns are corrected by entry, never by erasure. A reversing entry restores the original position, the correct entry is then posted, and both remain visible in the audit trail.
The same discipline covers purchase returns, where a credit note reverses the original bill and reduces both the creditor balance and the GST input credit claimed, and reimbursements, where a cost paid personally is settled as a liability to the person owed rather than booked as a second expense. Nothing is written over.
Specialised Journals
High-volume transactions are separated out of the general journal by type, so credit sales, credit purchases, cash in, and cash out each have their own book of original entry. This keeps the general journal clear for adjustments, and lets column totals post to the general ledger as a single figure at period end rather than line by line.
01 / 14
Credit Sales Journal
Ten invoices on credit terms totalling $59,455 in receivables, split between consulting fees, product sales, and GST collected.
Each line posts individually to the customer's account in the AR subsidiary ledger; column totals post to the AR control account. Revenue is recognised at invoice date, being the date the service was provided and therefore earned.
02 / 14
Credit Purchases Journal
$34,639 owed to suppliers, separated into inventory purchases, office supplies, and $3,149 of GST input credits.
Each line posts to the supplier's account in the AP subsidiary ledger, with column totals to the AP control account. Splitting GST at the point of entry is what makes the input credit claimable and the activity statement reconcilable.
03 / 14
Cash Receipts Journal
$37,928 banked, of which $31,020 settles existing debtor invoices and the balance is cash sales, consulting fees, and rent.
Debtor receipts clear the subsidiary ledger account without touching revenue, since the sale was recognised when invoiced. Settlement discounts carry a matching negative GST adjustment, because the GST originally recorded no longer reflects the amount received.
04 / 14
Cash Payments Journal
$46,162 paid out across creditor settlements, wages, insurance, and cash purchases.
Creditor payments reduce the supplier's subsidiary balance and the AP control account, and never touch GST Paid, because the input credit was claimed when the bill was recorded. Reimbursements settle a liability to the person who incurred the cost rather than creating a second expense.
General Journal
Twenty-eight entries covering everything the specialised journals cannot: non-routine credit transactions, owner contributions and drawings, corrections, returns, and the full set of period-end accruals. Every entry carries a narration, because an adjustment without a stated reason is indistinguishable from a mistake when someone reviews it six months later.
05 / 14
General Journal (1 of 3)
Non-routine credit transactions, owner contributions and drawings, a bad debt write-off, and a correcting entry for revenue posted to the wrong account.
Asset disposal takes four lines: receivable raised, accumulated depreciation cleared, asset removed at cost, and GST on the sale. Assets carry their depreciation history, so removing one means removing both accounts. Every entry shows a folio reference to where each side was posted.
06 / 14
General Journal (2 of 3)
Period-end accruals applying the matching principle: accrued revenue, accrued wages and interest, prepaid insurance expired, and unearned fees now earned.
Prepaid amounts move out of expense and into an asset until consumed. Costs incurred but not yet invoiced are brought into the period as a liability. Income received before it is earned is held as a liability rather than recognised as revenue.
07 / 14
General Journal (3 of 3)
Cost of sales under a periodic system, plus the four specialised journal totals posting in. Debits and credits agree at $362,459.
Four entries move opening inventory in, purchases in, returns out, and closing stock per stocktake out, leaving Purchases closed to nil and Cost of Sales at $74,700. Purchase and sales returns reverse to the same accounts the original invoice used, GST included.
General Ledger and Subsidiary Ledgers
Every journal total lands here. The ledger holds one running account per line item, and the AR and AP control accounts are where the subsidiary ledgers are proved. Eleven debtor accounts add to $71,325 and eight creditor accounts to $39,802, each agreeing to its control account exactly.
08 / 14
General Ledger (1 of 6)
Asset accounts with opening balances, period movement, and closing position.
Each posting carries a folio reference back to its source journal, so any balance can be traced to the transactions that produced it, and back again.
09 / 14
General Ledger (2 of 6)
Accounts Receivable Control, receiving posted totals from the credit sales and cash receipts journals.
A dishonoured cheque restores $2,200 to the debtor account, reversing the receipt without touching revenue. A $3,300 trade debt converts to a bill receivable — the debt does not disappear, it changes instrument.
10 / 14
General Ledger (3 of 6)
Accounts Payable Control, receiving totals from the credit purchases and cash payments journals.
Proved against the AP subsidiary ledger. A mismatch here usually means an invoice was posted to the wrong creditor, which the control test surfaces before payment runs are prepared.
11 / 14
General Ledger (4 of 6)
Liability and equity accounts, including GST on both sides, accrued liabilities, and the split between capital and drawings.
GST Receivable and GST Payable are held separately rather than netted, so the activity statement position reconciles directly to the ledger instead of being recalculated. Drawings sit apart from capital, keeping owner withdrawals distinct from contributed equity.
12 / 14
General Ledger (5 of 6)
Revenue accounts, carrying sales recognised at invoice date rather than at payment.
Debtor settlements do not appear here. They clear the receivable, because the revenue was already recognised when the sale was made. Recording them again would double-count the month.
13 / 14
General Ledger (6 of 6)
Expense accounts after accrual adjustments, showing costs matched to the period they relate to.
Balances reflect expenses incurred, not cash paid. The difference between the two is exactly what the accrual entries in the general journal were raised to capture.
Trial Balance
The proof that the cycle held. Every ledger balance listed by account number, with total debits equal to total credits before any financial statement is prepared.
14 / 14
Trial Balance as at 30 June 2026
Post-adjustment trial balance drawn from the general ledger, agreeing at $578,720 on each side.
Contra accounts are disclosed against their parent rather than netted into it, so the allowance for doubtful debts and the three accumulated depreciation accounts stay visible. A balanced trial balance proves the arithmetic, not the judgement — it will not catch a transaction posted to the wrong account, an entry omitted entirely, or two errors that cancel out. That is why the AR and AP control reconciliations happen before this point, not after.
