The Importance of Using the Horizontal Model or Writing Journal Entries for Business Transactions

Nov 9, 2023

Professional Services, Lawyers, Legal Services

In today's competitive business landscape, efficient and accurate financial record-keeping is vital for the success of any organization. Properly documenting and tracking business transactions allows companies to evaluate their financial health, make informed decisions, and comply with legal requirements. In this article, we will explore the significance of using the horizontal model or writing journal entries for each transaction and adjustment, highlighting the successful implementation at Kissick Co. during their first year of operations.

The Horizontal Model: A Powerful Tool for Financial Record-Keeping

The horizontal model, also known as the horizontal method or T-accounts, provides a visual representation of transactions and their impact on different accounts. By utilizing this model, businesses can easily identify and analyze individual transactions, ensuring accurate financial statements and facilitating proper decision-making.

At Kissick Co., the horizontal model was employed as a cornerstone of their accounting processes. Each transaction and adjustment was diligently recorded using this method, allowing the company to maintain clarity and transparency in their financial records.

The Journal Entry: Detailed Documentation for Audit and Analysis

Aside from the horizontal model, writing journal entries for each business transaction provides comprehensive documentation that aids in audits, financial analysis, and internal control. A journal entry serves as a chronological record of transactions, detailing essential information such as accounts involved, debits, credits, and the corresponding dollar amounts.

Throughout its first year of operations, Kissick Co. demonstrated their commitment to accurate record-keeping by diligently writing journal entries for every single transaction and adjustment. This meticulous approach not only ensures compliance with accounting principles but also allows for in-depth analysis of financial performance.

Transactions and Adjustments at Kissick Co.

Now, let's delve into the specific transactions and adjustments that occurred during Kissick Co.'s first year of operations, highlighting the utilization of the horizontal model and journal entries for each entry:

1. Sales Revenue - Horizontal Model

To record the sales revenue for the first quarter, Kissick Co. utilized the following horizontal model:

AccountDebitCredit Sales Revenue$X,XXX Accounts Receivable$X,XXX

By structuring the entry in this manner, Kissick Co. was able to visually see the impact of their sales revenue on both the Sales Revenue and Accounts Receivable accounts. This aids in reconciling their financial statements, reviewing sales performance, and tracking outstanding payments.

The Benefits of Accurate Financial Record-Keeping

Implementing the horizontal model and writing journal entries for each transaction and adjustment offers numerous benefits to businesses like Kissick Co.:

  • Easy Audit and Tax Compliance: With well-documented transactions, businesses can undergo audits and meet tax obligations effortlessly.
  • Better Decision-Making: Accurate financial records enable informed decision-making, formulating effective strategies, and identifying areas for improvement.
  • Improved Financial Analysis: Detailed records allow for thorough financial analysis, assessing profitability, liquidity, and identifying patterns or trends.
  • Enhanced Internal Control: Maintaining clear and organized financial records fosters a robust internal control environment, minimizing the risk of fraud and errors.


By utilizing the horizontal model and writing journal entries for each transaction and adjustment, businesses like Kissick Co. can lay a strong foundation for financial success. The meticulous documentation of transactions ensures accuracy, compliance, and enables comprehensive financial analysis. Embracing these practices is therefore crucial for professional services, lawyers, and legal services seeking excellence in their financial management.

use the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at kissick co.