Journal-Practical

  • A Journal is a book where transactions are recorded from source document in a chronological order.
  • It provides a date wise record of all the transactions with details of accounts debited and credited, along with the amounts of each transaction.  
  • Journalising is a systematic process of recording a financial transaction in the Journal in terms of debit and credit.
  • Every financial transaction of a business has dual effect, i.e., it involves at least two accounts, one is debit and another is credit.
  • Three steps in the process of journalising are identifying the affected accounts, recognising the kinds of affected accounts and applying the rules of debit and credit
  • Compound journal entries may be of the following three types: debiting one account and crediting two or more accounts, crediting one account and debiting two or more accounts and debiting two or more accounts and crediting two or more accounts.
  • In case of opening entry,Opening Journal entry is an entry, by means of which, the balances of previous accounting period are brought forward in the books of the current accounting period.  
  • Apart from normal transactions of the business, some special transactions may also take place. Some of them are bad debts, bad debts recovered, outstanding expenses, prepaid expenses, depreciation, interest on capital and drawings, sales tax, value added tax, capital expenditure in relation to fixed assets, drawings in goods, goods distributed as free sample, loss of goods by theft or fire, goods given as charity, profit or loss on sale of assets, loan taken and loan advanced, advance received, refund of income tax, goods purchased through VPP, trade discount and cash discount.

To Access the full content, Please Purchase