Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

The term that describes the initial recording of a business transaction is journalizing. This process involves documenting financial transactions in a journal, which is the first step in the accounting cycle. Each transaction is recorded with relevant details, including the date, accounts affected, and the amounts debited and credited.

Journalizing is crucial because it captures all financial activities of a business in chronological order, providing a detailed and organized record that can be referred to later for summarizing in ledgers or preparing financial statements. It ensures that transactions are recorded accurately, which is essential for maintaining the integrity of financial reporting.

In contrast, posting involves transferring the data from the journal to the individual accounts in the general ledger after transactions have been journalized. Trial balancing is the process of ensuring that total debits equal total credits in the accounts at a specific time, providing a check on the accuracy of the entries made. Adjusting entries are made at the end of an accounting period to update account balances before financial statements are prepared. Thus, journalizing is the foundational step in the recording process that precedes all these other actions.