Describe the term journal in accounting.
Journal is called as book of original entry. Journal is a detail record of business transactions that are
made in a date. The word JOUR means a day, so it is a day book or daily book of accounting.
Journal entry has following structure −
- A header line (journal entry number and entry date).
- First column includes account number and account name (credited).
- Second column to enter debited amount.
- Third column to enter credited amount.
- A footer line (brief description of entry).
Features of the journal are −
- Book of primary entry.
- Daily record book.
- Chronological order.
- Dual aspect of transactions.
- Use of explanation.
- Different columns.
- Subsidiary book.
Rules in journal are as follows −
- Debit the account when assets and expenses are increase.
- Debit the account when liabilities and revenues decreases.
- Credit the account when assets and expenses decreases.
- Credit the account when liabilities and revenues increase.
Types of journal entries are as follows −
Adjust entry − Used in month end to alter financial statements with respect to accounting frame works (GAAP, IFRS)
Compound entry − Used to record multiple or complex transactions at once
Reversing entry − Used to reverse the entry as of the beginning of the following period.
Advantages of journal are −
- Detail description of transaction.
- Increases efficiency in accounting tasks.
- Minimise errors.
- Used as future reference.
- Rectification of errors.
- Subsidiary journals are maintained which makes handling easy.
- Information can be known easily.
Published on 12-Aug-2020 14:40:25