JOURNAL

JOURNAL

AIMS AND OBJECTIVES

(i) To understand the meaning of journal and ledger.

(ii) To study the advantages and important point of journal.

1.1 INTRODUCTION

When the business transactions take place, the first step is to record the same in the books of original entry or subsidiary books or books of prime or journal. Thus journal is a simple book of accounts in which all the business transactions are originally recorded in chronological order and from which they are posted to the ledger accounts at any convenient time. Journalizing refers to the act of recording each transaction in the journal and the form in which it is recorded, is known as a journal entry.

1.2 DEFINITION

In financial accounting, journal is a record of all the transactions of a business which occur with in a specific time period. The business transactions are recorded chronologically in a journal each one with a short description. A record of a single transaction in a journal is called journal entry.

Journal is a book which lists accounting transactions of a business other than cash, before posting them to ledgers.

1.3 ADVANTAGES OF JOURNAL

The following are the inherent advantages of using journal, though the transactions can also be directly recorded in the respective ledger accounts;

1. As all the transactions are entered in the journal chronologically, a date wise record can easily be maintained;

2. All the necessary information and the required explanations regarding all transactions can be obtained from the journal; and

3. Errors can be easily located and prevented by the use of journal or book of prime entry.

The specimen journal is as follows:

Date	Particulars	L.F.	Amount  (Rs.) Debit	Amount  (Rs.) Credit

Example:

Business transactions of Mr. A for the month of Jan.1997.

1st January, 1997  A started business with cash          Rs.20,000/-

3rd January, 1997  Goods purchased for cash              Rs.6,000/-

5th January, 1997   Goods purchased from S               Rs.4,000/-

7th January, 1997         Goods sold for cash                 Rs.2,000/-

10th January, 1997            Goods sold to B                  Rs.6,000/-

12th January, 1997              Cash paid to S                   Rs.2,000/-

17th January, 1997    Cash received from B                  Rs.4,000/-

23rd January, 1997            Paid wages                           Rs.100/-

25th January, 1997  Furniture purchased from R           Rs.400/-

28th January, 1997      Paid for interest                          Rs.200/-

31st January, 1997      Paid salaries                                Rs.200/-