Accounts

Meaning, Characteristics and Advantages of Journal

Olawunmi Omosanya - Wed, 17th April, 2019 @ 15:29: PM

Definition of a Journal:

A journal, also called book of original entry or book of primary entry or book of first entry or day book or chronological book is a book where daily transactions are recorded in a chronological order (the order of occurrence). It contains the total record of all transactions made by a company and may be distinguished into different types which will include sales journal (for recording inventory and sales), cash receipts journal (for recording money received from sales or cash inventory), purchase journal (for recording all purchases made by a company), general journal and so on.

The content of a journal includes the followings:

  • The date when the transaction occurred

  • The description of the transaction

  • Debits

  • Credits

  • Accounts affected

 

Note: The process of recording a transaction in a journal is called journalizing or journal entry.

After transactions are entered in a journal, it needs to be posted to the appropriate ledger account. This process is called ledger posting or ledger entry.

 

The format for writing a journal will include the following headings:

 

  • Date

This is the column that contains the date of the business transaction that is been recorded. The date can take a variety of formats, for example "10/03/1969", "10 March, 1969", "03/10/1969", "1969/03/10" and so on.

 

  • Particulars

This is also called the details column. The names of the debited and credited accounts are written here. The debited account is usually written on the left hand side and will usually end with the phrase “Dr” which stands for debit. The credited account is written towards the right and may include the phrase “Cr” towards its end. After the names of both accounts have been entered, a narration is often written below (inside a bracket) to give more details about the transaction.

 

  • Ledger Folio

When the journal had been transferred to a ledger account, the page number(s) of the ledger where both accounts have been posted are written in the folio column, adjacent to particulars column in the journal. Once the Ledger folio column had been entered in the journal, it will signify that the transaction had been successfully transferred to a ledger. Therefore the ledger folio column will aid in locating both accounts in the ledger, in addition to indicating a successful transfer from the journal to the ledger.

 

  • Amount

The column for amount is put into two. The amount debited is written in the first amount column while the credited amount is written in the second amount column. Both are written against the columns of their account names.

 

The table shows what a journal should look like:

    Date                 Particulars                 Ledger Folio   Amount   Amount

10/03/69   Textile Acc. Dr | Dec Acc Cr.               5             1,000      1,000

 

Note:

The recording of a transaction in a journal in which one account is debited while another is credited is called Simple Entry.

The recording of a transaction in a journal in which two or more accounts are debited and two or more accounts credited is called Compound Entry.

 

Characteristics of Journal

  1. The transactions are recorded as soon as they occurred.

  2. Transactions are recorded chronologically.

  3. A narration is often written below the accounts name.

  4. Journal format includes the date of event, particulars, folio and amount.

  5. The amount occupies the last two columns, the first representing debited amount and the second, credited amount.

 

Advantage of Journal

  1. A ledger mistake can be corrected with a journal.

  2. It brings about efficiency in the contents of a ledger.

  3. A transaction in a journal can be easily traced chronologically.

  4. Journal presents the full transaction entry.


THANKS FOR READING - Please Help Share!



Amazing facts in Accounts

It is believed that Bookkeeping is the only English word to contain three sets of double letters repeatedly.

please read our article on bookkeeping vs Accounting here


NOTABLE POINTS IN Accounts

CONTRIBUTE TO THIS TOPIC | ASK A QUESTION