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Journal or Book of Original Entry in Accounting

The book in which the transaction is recorded for the first time is called Journal in accounting. A journal is also referred to as Book of Prime Entry or the book of original entry. In this book, transactions are recorded on a daily basis in chronological order. The process of recording transactions in a journal is called as ‘Journalising’. The entry made in this book is called a ‘journal entry’.

The specimen of a journal book is shown below.
Accounting Journal Specimen

Types of Journal in Accounting

In paper-based accounting, Journal is divided into two types –

(i) General Journal and
(ii) Special Journal.

General Journal: This book records those transactions which occur so infrequently that they do not require the setting up of special journals. Examples of such entries:

(i) opening entries
(ii) closing entries
(iii) rectification of errors

Special Journal: Special journals refer to the journals meant for specific transactions of similar nature. Special journals are also known as subsidiary books or day books.

The number of special journals varies according to the requirement of each enterprise. In any large business, the following special journals are generally used:

  1. Cashbook
  2. Purchases (journal) book
  3. Sales (journal) book
  4. Purchase Returns (journal) book
  5. Sale Returns (journal) book
  6. Bills Receivable (journal) book
  7. Bills Payable (journal) book

All cash and bank transactions.

Purchases (journal) book:
All credit purchases of goods – only those Goods that are purchased for resale are covered here.

Sales (journal) book:
All credit sale of goods.

Purchase Returns (journal) book:
All purchase returns – i.e. return of goods back to suppliers due to defects.

Sale Returns (journal) book:
All sales returns – i.e. return of goods back from Customers.

Advantages of Journal:

The following are the advantages of a journal:

  1. Chronological Record: It records transactions as and when it happens. So it is possible to get detailed day-to-day information.
  2. Minimizing the possibility of errors: The nature of transaction and its effect on the financial position of the
    business is determined by recording and analyzing into debit and credit aspect.
  3. Narration: It means explanation of the recorded transactions.
  4. Helps to finalize the accounts: Journal is the basis of ledger posting and the ultimate Trial Balance.

Journal Entry in the Journal

Follow the steps to record a journal entry in the journal;

Step I:
Determine whether a transaction is Financial/Non-Financial transaction. Only Financial Transaction is recorded in the Journal.

Step II :
Analyze the transaction to identify what are the accounts involved in the transaction.

Step III :
Determine the nature of each of the accounts involved in the transaction, i.e. whether the account belongs to Personal Account or Real Account or  Nominal Account. 

Step IV :
Determine the accounts which are to be Debited and Credited. For this, Apply the Golden Rules of Accounting based on the nature of accounts.

Step V :
Identify the amount involved. Ensure that the amount of debit and credit must be equal. Then write the Journal Entry along with the narration in the format mentioned below.format of journal


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