Introduction of Journal: Process and Classifications of Journal

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Introduction of Journal

  • Journal is the primary books of accounts where all the day to day transactions are recorded in a chronological order. It is also called as “Book of Original Entry” or “Book of Original Record”. All the business irrespective of its nature are recorded in the books of accounts. The process of recording transactions in the journal is known as “Journalising”. In this recording of transactions, the accountants follow the double entry aspect of entering the transactions.

  • The journal stores the date wise chronological records of all the business transactions at one place and also provides an explanation of the transactions. It helps in the understanding of the principle of double entry system which makes easier to trace the transactions without any difficulties in the future.

  • Journal entries are recorded in the specified format designed by the accounting domain is as follows:

Journal

Journal

Journal

  • As mentioned in the above picture journal book is seems to be the as presented. The date is mentioned in the extreme left corner, where the month /day of the transactions are being recorded in a chronological order and the adjacent is the particulars, which records the detailed narration about the transactions of the transactions followed by ledger folio (L.F) and also debit amount and credit amount, which records the amount involved in the particular transactions.

  • For better understanding of the journal entries, please follow the below given picture.

  • Feb 14 2020 Commencement of business with cash of Rs. 50,000.

  • The detail explanation of this transactions is given in the below mentioned table.

Commencement of business

Commencement of Business

Commencement of business

Process of Journalising

Process of Journalising

Process of Journalising

Process of Journalising

Illustration

From the following transactions, identify the nature of accounts and state which account will be either debited or credited?

From the Following Transactions, Identify the Nature of Accounts and State Which Account Will be Either Debited or Credited?
From the following transactions, identify the nature of accounts and state which account will be either debited or credited?

Sl. No

Transaction

Accounts Involved

Types of Account

Debit/ Credit

1

Mr. Shiba started business with ₹ 60,000

Cash Account

Capital Account

Real

Personal

Debit (incomings)

Credit (Giver)

2

Purchased goods for cash ₹ 75,000

Purchase A/c

Cash A/c

Nominal

Real

Debit (expenses)

Credit (outgoings)

3

Sold goods for cash ₹ 35,000

Cash A/c

Sales A/c

Real

Nominal

Debit (incomings)

Credit (incomes)

4

Sold goods to Arindam ₹ 90,000

Arindam

Sales A/c

Personal

Nominal

Debit (receiver)

Credit (Income)

5

Purchased furniture for ₹ 1,20,000

Furniture A/c

Cash A/c

Real

Real

Debit (incomings)

Credit (outgoings)

6

Rent paid to owner ₹ 3500

Rent A/c

Cash A/c

Nominal

Real

Debit (expenses)

Credit (outgoings)

7

Paid wages

Wages A/c

Cash A/c

Nominal

Real

Debit (expenses)

Credit (outgoings)

8

Received dividend from shares

Cash A/c

Dividend A/c

Real

Nominal

Debit (incomings)

Credit (income)

9

Sold of machinery ₹ 40,000

Cash A/c

Machinery A/c

Real

Real

Debit (incomings)

Credit (outgoings)

10

Salary outstanding

Salaries A/c

Outstanding salaries A/c

Nominal

Personal

Debit (expenses)

Credit (given)

Classifications of Journal

As discussed in the previous chapters, journal is a book in which transactions are recorded in chronological order, but sometimes it is difficult to record and trace out a particular transaction, which arose the need of segregating the journal into several parts, popularly known as subsidiary books. Following are the important subsidiary books used by an organisation:

Classifications of Journal

Classifications of Journal

Classifications of Journal

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