In accounting, you have probably heard the words transaction processing but do you really know what it means? Simply stated, transaction processing is a series of events that takes place to post your transaction into your accounting records. So, it starts with putting your entry into two or more T-accounts which is in other words, your journal entry. It will then be posted into journals specific to the transactions. It could be in the cash disbursements, purchases, sales, cash receipts, or general journal. Once it is cleared into these journals, it makes it's way to the general ledger, where all transactions, by individual account, are posted. They are all posted with detailed debits and credits for each account, with a balance at the bottom. All end balances then go to the income statement or balance sheet, depending upon if they are assets/liabilities/owner's equity (balance sheet) or sales/cost of goods sold/expenses (income statement). That's all there is to transaction processing.
Copyright Jeanine Pfeiffer