1.A daily record of events (A logbook)
2.The part of shaft or axle
3. A newspaper or periodical
Happiness depends on ourselves. -Aristotle
A journal is a diary of day-to-day thoughts and activities, with each entry dated.
For example, I could have a journal entry dated Nov 25, 2009 that started, "Dear Diary, Today is my mother's birthday. My sister and I TRIED to bake her a cake, and nearly burned the entire house down..."
The journal is the book, and the journal entry is what you wrote for a particular day.
After posting the transactions in Journal, Ledger is prepared.
Process Flow of Accounting -
Journal > Ledger > Trial Balance > Final Accounts (Trading and Profit & Loss A/c and Balance Sheet).
Some of the examples of Journal as follows:
Goods purchased from Mr. Ram, the journal entry for this transaction will be -
Dr. Goods A/c. xx
Cr. Mr. Ram A/c xx
(It is a credit purchase since nothing has been mentioned in the transaction).
Goods purchased from Mr. Ram in cash, the journal entry for this transaction will be -
Dr. Goods A/c. xx
Cr. Cash A/c xx
Cash paid by Mr. X for sale of goods, the journal entry for this transaction will be -
Dr. Cash A/c. xx
Cr. Sales or Goods A/c xx
1. When it is used in the context of accounting,it denotes to a register or book which records the day-to-day transactions.It is a primary record of transactions in a day, and it is from this "journal" the transactions of each party,is recorded into another book called "Ledger".
2.Journal is a newspaper or periodical.One newspaper has its name " Free Press Journal".A person working in this field is called a journalist.
3. In the context of engineering the word denotes to an axle or shaft.But this is not commonly seen in day-to-day use. Context 1 & 2 are common.
What is double entry system of accounting?
Double entry book-keeping or double entry system of accounting is the most widely accepted form of accounting in the modern world.
In all the transactions (business) that take place, there is an exchange of value. In double entry system of accounting, both the aspects of accounting are recorded and hence the name.
Whenever a transaction takes place, on one hand there is an increase in the value of one's assets and on the other, there is a decrease in the value of assets. The system recording both the aspects of increase and decrease is known as double entry system of accounting. For example, when we buy furniture by paying cash, there is an increase of an asset(furniture) and decrease of an asset (cash). In double entry, both the aspects would be recorded.
An account is a summary of all the transactions retaining to a particular head or type.
There are mainly three types of accounts:
1.Personal accounts- In these types of accounts, transactions with different person(s), firms or companies are recorded. Example- Roy & Banerjee, Union Bank of India, etc.
2.Real accounts- In these types of accounts, transactions relating to property or of any tangible asset are recorded. Example- Cash, Machinery, etc.
3.Nominal accounts- Transactions relating to increase and decrease in revenue (like expenses, losses or gains) are recorded. Example- salary, rent, interest, etc.
Rules for Debit and Credit (this are generally accepted accounting rules. The content may match with some sources on the web)
1.Personal accounts- For personal accounts,we Debit the receiver and credit the giver.
2.Real accounts- For real accounts, we Debit what comes in and Credit what goes out.
3.Nominal accounts- For nominal accounts, we Debit all expenses and losses and credit all incomes and gains.
What do you mean by Journal?
Derived from the French word 'Jour'(meaning daily), a Journal is a book where a complete record of daily transactions is maintained. Whenever a transaction takes place, the first recording is done in Journal and hence it is called the book of
original entry or the book of primary entry. Journal is the first step in the process of accounting and the process is called Journalising.
Steps in Journalising:
1. The first step in recording a Journal entry is the recording of Date. The first column in the Journal is the Date column. Entries are made in the chronological order.
2. The second step is very important as it involves the various account names and whether they are debited or credited. A small narration of the transaction is also written.
3.The third step is the recording of the page number in which the above journal is to be posted.
4. The fourth step is the entering of the debit amounts in the debit amount column.
5. The last step is the entering of the credit amount in the credit amount column. The sum of the credit amount and the debit amount should be the same.
An example of a Journal entry:
On 14th June,2009, credit purchases- Rs.4000.
The entry would be as follows:
14.06.09 Purchases A/C Dr. 4000
To Creditors A/C 4000.
Types of Journal Entry
1. Simple Entry- A simple entry is an entry in which there is an involvement of only two accounts as in the above example.
2. Compound Entry- A compound entry is one in which there is an involvement of more than two accounts. Example, Cash and cheque given to settle Mr. A's account. The entry would be:
Mr. A's A/C Dr. xxx
To Cash A/C xxx
To Bank A/C xxx
Whenever any transaction take place in accounts, firstly that is record in the journal. Then it is called Journal Entry.
Journal is the first step in accounts. When we done it, it is also called jounalising.
lets take one example to understand it in a clear manner:
1. Ram sales goods to shyam on credit worth Rs.1,000/-, in this case the journal/journal entry would be:
Shyam A/c ------Dr. 1,000
To Sales A/c 1,000
(Being good sold to shyam)