what is journal?

 Journal 

                    A journal is a detailed account that records all the financial transactions of a business, to be used for the future reconciling of accounts and the transfer of information to other official accounting records, such as the general ledger.

Before computerized bookkeeping and accounting, the transactions were entered manually into a journal and then posted to the general ledger. Apart from the general journal, accountants maintained various other journals including purchases and sales journal, cash receipts journal and cash disbursements journal. With accounting software, today you’re likely to find only a general journal in which adjusting entries and unique financial transactions are entered. 

                                         

Types of Journal

There are two types of the journal:

• General Journal: General Journal is one in which a small business entity records all the day to day business transactions
• Special Journal: In the case of big business houses, the journal is classified into different books called as special journals. Transactions are recorded in these special journals on the basis of their nature. These books are also known as subsidiary books. It includes cash book, purchase day book, sales day book, bills receivable book, bills payable book, return inward book, return outward book and journal proper.

  The journal proper is used for entering infrequent transactions such as opening entries, closing entries and rectification entries.
  
  The debit and credit sides of the journal must be equal. There are some transactions in which you will find there are more than one debit for a single credit, more than one credit for a single debit or multiple debits and credits for an entry. Such entries are called as a compound journal entry. Nevertheless, the aggregate amount of debit and credit in an entry must tally.

  Format of Journal

  

  • Date: In this column, we mention the date of the transaction along with the month in which the transaction took place. The year is indicated at the top only once and not repeated with every date.
  • Particulars: This column indicates the accounts which are affected, i.e. debited or credited, by the transaction. In the very first line, we write the account which is debited and then in the extreme right of the same line and column we write Dr. which indicates Debit.

    In the next line, after leaving some space, we write the account which is credited starting with the preposition ‘to’. A small narration for the respective transaction is given in the third line which explains the entry in the brackets, and it starts with the word ‘being’.

  • Voucher Number: In this column, we enter the number written on the voucher of the concerned transaction.
  • L.F. or Ledger Folio: As we know that transactions entered in the journal are then taken to the Ledger, in their respective accounts. In this column, the page number concerning the entry in the ledger is mentioned.
  • Dr. Amount: The amount to be debited for a particular entry is written in the same line, where the debited account is indicated.
  • Cr. Amount: The amount to be credited for a particular entry is written in the same line, where the concerned credited account is written.

Importance Of Journal:

 1. It is an accounting record in which all entries are recorded data wise. So all                transactions of a particular data will be available at one place.
  2. Chances of any entry being left or ignored are minimum when all the transaction        are recorded in journal.
  3.  Even errors is the past can be rectified with the help of journal entries.
  4  Journal is the basis for further accounting records like ledger and financial                 statement.
   5  All adjustment entries and closing entries can be recorded in journal.
  
GOLDEN RULES OF ACCOUNTING :