CONCEPT OF JOURNALIZING AND THE JOURNAL
The accounting process starts with the identification of the financial transactions of a business. Such financial transactions are primarily recorded in certain books in a systematic order. These books of primary record are called the journal and the act of recording the transactions in the books based on some rules is known as journalizing. Thus, journalizing is a process of systematically recording financial transactions of a business in chronological order by following certain rules and principles. This is the first step in the book-keeping and accounting process.
The journal is an important book under the double-entry system. It is the first book of systematic records of the financial transactions of the business. It is called the book of original or prime entry because the financial transactions are first recorded in this book as and when they take place. It is also called a subsidiary book as it is maintained to help prepare the main book known as the ledger. The journal is prepared with the help of a memorandum or waste book, which is a rough and temporary record of the financial transactions of the business.
MEANING AND DEFINITIONS OF JOURNAL
The literal meaning of the journal is a record of day-to-day financial transactions. Formally, however, it may be defined as a book of original entry or a subsidiary book in which the financial transactions of the business are systematically recorded in order of their occurrence. Thus, the journal is the book of original entries in which all the financial transactions are systematically recorded in chronological order as they occur in the business.
The following definitions are important to consider:
R. N. Carter: “The ‘journal’ or ‘daily record’ as originally used as a book of prime entry in which transactions were copied in order of date from a memorandum or waste book. The entries as they were copied, were classified into debits and credits, so as to facilitate they are being correctly posted afterwards in the ledger.”
L. C. Cropper. “A journal is a book, employed to classify or sort out transactions in a form convenient for their subsequent entry in the ledger.”
It is clear from the above definitions that the journal is a book of prime or original entry in which all financial transactions of a business are systematically recorded according to their dates of occurrence and is maintained with a view to helping prepare the subsequent ledger book.
THINGS TO REMEMBER (TTR)
The journal is a book of prime or original entry in which all financial transactions of a business are systematically recorded according to their dates of occurrence and is maintained with a view to helping to prepare the subsequent book of record known as the ledger.
OBJECTIVES OF THE JOURNAL
The following are the important objectives of the journal:
- To keep a systematic record of financial transactions.
- To show financial transactions in chronological order.
- To present necessary information about the financial transactions.
- To use as legal evidence of financial transactions.
- To facilitate the preparation ledger book.
SPECIMEN OR RULING OF THE JOURNAL
The specimen or ruling of the journal is as shown below:
Journal entries in the book of…
| Date (1) | Particulars (2) | L.F. (3) | Debit Rs. (4) | Credit Rs. (5) |
|---|---|---|---|---|
Explanation of the above specimen
| Column No. | Column | Explanation |
|---|---|---|
| (1) | Date | This column shows the dates of financial transactions in their sequential order. |
| (2) | Particulars | This column shows the names of account to be debited and credited along with a brief description of the transaction which is called narration. |
| (3) | Ledger Folio (L.F.) | This column shows the page number of the ledger book in which a particular account is located. |
| (4) | Debit amount | This column shows the amount to be debited. |
| (5) | Credit amount | This column shows the amount to be created. |
