The Journal

The business transactions, after their analysis, are not directly recorded in their respective account. They are listed in a Chronological order – day by day, day after day, and first recorded in a book of accounts called Journal. The word Journal means a daily record and since transactions are originally recorded in this book. Formerly journal was the book of prime entry used to record every transaction. With the growth in business activity, however, the journal in its original form has become impracticable because of larger number of transactions. Thus Special journals are used to record transactions relating to cash, credit sales, credit purchases, bills of exchange etc., restricting the use of journal for few transactions. It is relevant to state that although the use of General Journal has been much restricted, it is only a practice though journal that can enable the beginners to understand fully the principles of double entry system.

Journalizing

Recording business transactions in the journal with the help of debit-credit rules of the double entry system is called the journalizing. In the journal details such as date, the account to be debited, the amount to be debited, the account to be credited, the amount to be credited and explanation of the business transactions are all recorded in an appropriate manner.
The following procedure is followed for making each entry in the Journal:

1.    Each Transaction is analyzed in terms of the accounts affected. As a rule, every transaction has at least two accounts, corresponding to its giving and receiving aspects. Thus it is essential to find out the account involved in a transaction. The account of the business enterprise recording the transaction is never taken into consideration. It is concerned only with the things it gives or receives, with other persons or parties with whom it enters into business dealings. Thus it deals with accounts of the things or properties that come in and go out, the accounts of the expenses incurred by it, the accounts of income earned by it and accounts of the parties who gives a benefit to it and receives a benefit from it.

2.    Find out the types of the account affected in a transaction, that is, personal real and nominal.

3.    The next step is to apply the rules of debit and credit to each type of affected account. for the sake of convenience the rules of summarised  as under:

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Types of Accounts_________________Debit_____________________  Credit
Personal Accounts_____________  The Receiver _________________ The Giver
Real Accounts_______________  What comes in________________ What Goes Out
    ________________________(Property acquired)__________  (Property disposed off or sold)
Nominal Accounts___________ Losses and Expenses _________    Income and Gains.

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4.    Finally the equality of debit and credit amounts must be established.

The following is the typical form of General Journal.

Date	Particulars ( Accounts Titles and Explanation	Vouchers No.	Ledger Folio	Debit Amount	Credit Amount
Year Month and Day	(a)    Account Debited (b)    Account Credit (c)    Narration (i.e., explanation of the Transactions.

Columns Explained

(i)    Date: The date of business on which it took place is written in the date column. The year is written on the top followed by the month and day of the month.

(ii)    Account titles and explanation: The actual journal entry is recorded in this column. The title or name of the account to be debited is written first at all the left side of the particulars column next to the date column line. Brevity in explanation is desirable but at the same time it should be adequate to explain the transactions. The particulars column is ruled off after each entry by a thin line below the narration so as to indicate the completion of the particulars column.

(iii)    Vouchers No. In this column we write the serial number of the source document.

(iv)    Amounts debited and credited: The debit amount is recorded in debit amount column opposite the title of the account debited. The credit amount is recorded in the credit amount column opposite the title of the account credited.

(v)    Ledger Folio Column is not used at the time transactions are entered in the general journal. When the debit and credit accounts are posted to ledger, this column is used to indicate that the posting has been done by placing the page (folio) number of the ledger in which the accounts are posted.

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