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.

Mandalika

Published on 12-Aug-2020 14:40:25