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Note on Journal

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Journal is the first step of the accounting process. It is also the first book to keep the systematic record of all the business transactions with the first entry of all financial transactions. It is the original or primary book in which the financial transaction is first recorded in the order of date and helps to maintain the principal book or ledger. It is the book of prime entry in which each and every transaction is registered showing debit and credit aspects with a brief explanation which is called narration.

Some of the main definitions of journal are:

"A journal is a book, employed to classify or sort out transactions in a form convenient for their subsequent entry." -L.C. Cropper

"The journal or daily record as originally used was a book of prime entry in which transactions was copied in order to date from a memorandum or waste book. The entries as they were copied, were classified into debits and credits, so as to facilitate they are being correctly posted afterwards in the ledger." -R. N. Carter.

From the above definition, it is clear that journal is the primary record of all the financial transactions in which each and every transaction is registered showing all the debit and credit account balances.

Objectives

The following are the main objectives of journal:

  1. To make the permanent and systematic records of all the financial transactions.
  2. To help in preparing the principal book i.e ledger.
  3. To provide the legal evidence for all the financial transactions performed by the organization.
  4. To present all the complete information of each financial transactions.
  5. To show all the debit and credit aspects or accounts involved in each and every financial transaction.

Journalizing

All the financial transactions are first of all recorded in the books of the journal. Journalizing is the process of recording the financial transactions in the journal in a systematic way. The record of the transactions that is made in the journal is called journal entry. Journalizing is the act of passing the journal entry in the books of account. The following steps are to be taken into consideration while journalizing the transactions in the journal book:

  • Identifying the two aspects of the transactions.
  • Identifying the appropriate accounts for two aspects of the transactions.
  • Identifying the debit and credit accounts of the transactions by applying the rules of debit and credit.
  • Giving the entry for the transactions in the book of a journal in chronological order.

Specimen of Journal

The specimen of the journal is as follows:

Journal
Journal

  • Journal is the first step of accounting process.
  • Journal is the first book to keep systematic record of all the business transactions.
  • Journal is the primary record of all the financial transactions in which each and every transaction is registered showing debit and credit accounts.
  • The process of recording the financial transactions in the journal in a systematic way is called journalising. 
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Very Short Questions

The following are the objectives of preparing journal:

  1. To make permanent and systematic record of all the financial transactions.
  2. To help to prepare the principal book or ledger.
  3. To provide legal evidence of all the financial transactions performed by the business.
  4. To present complete information of each transactions.
  5. To show debit and credit aspects or accounts involved in each transactions.

The following are the main importances of journal:

  1. It provides the legal evidence of all the transactions performed by an organization.
  2. It provides the foundation for further accounting processes of the transactions.
  3. It provides the basis for preparing ledger accounts.
  4. It helps to minimize errors in recording and posting due to the involvement of both aspects of the transactions.
  5. It fulfills the further accounting processes of the transactions.

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  • Which of the following statements is incorrect In the double entry accounting system maintained manually?

    A journal entry is needed only in the absence of other suitable book of prime entry for the transaction.


    A journal entry should always consist of a single debit entry matched by a corresponding credit entry.


    A journal entry should always end with a narration explaining the need for it.


    A journal entry should be substantiated by appropriate voucher and authorized at proper level.


  • If a company uses special journal, cash sales should be recorded in which journal?

    General journal


    Cash receipts journal


    Sales journal


    Cash disbursements journal


  • If a company uses special journals, credit sales should be recorded in which journal?

    Cash disbursements journal


    Purchase journal


    Cash receipts journal


    Sales journal


  • If a company uses special journal, purchase of supplies on the account should be recorded in which journal?

    Cash receipts journal


    Sales journal


    Purchases journal


    Cash disbursements journal


  • The rule of journalizing in personal account is ______.

    debit the giver, credit the receiver


    debit all expenses and losses, credit all incomes and profits


    debit what comes in, credit what goes out


    debit the receiver, credit the giver


  • ______ is the record of assets of the business.

    Nominal account


    Personal account


    Imperial account


    Real account


  • ______ does not exist in the business in real form. It appears only in the books.

    Personal account


    Nominal account


    Real account


    All the answers are correct


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