MEANING AND FORMAT OF

JOURNAL, LEDGER AND TRIAL

BALANCE
 JOURNALISING

A Journal is a book in which transactions are recorded in the chronological order.

A journal is a book of original entry or book of prime entry.
The process of recording a transaction in a journal is called journalising.
An entry made in the journal is called journal entry.
 FORMAT OF A JOURNAL
Date Particulars L.F Debit Amount Credit Amount
(Ledger Folio)

29/10/ Cash A/c Dr.

2021 To Sales A/c
(……………..)

NOTE: Except the L.F column, all other columns are recorded at the time of journalising. The L.F. column is
recorded at the time of posting.
STEPS IN JOURNALISING
Ascertain what accounts are involved in transaction.
Find out the nature of the accounts involved.
Ascertain the rule of debit and credit according to type of account.
Ascertain which account is to be debited and which is to be credited.
Record the date of transaction in date column
Write the name of account to be debited very close to the left hand side along with the abbreviation
‘Dr.’
Write the name of account to be credited in the next line preceded by the word ‘To’ at a few spaces
towards right in ‘Particulars column’.
Write ‘Narration’ (explanation)
Draw a line across the ‘Particulars column’ to separate one Journal Entry from the other.
USES OF JOURNAL
Transaction is recorded in the order in which they occur.
Each journal entry in the journal carries narration which gives a brief explanation of
the transaction.
Recording of both the aspects of transaction(i.e., debit and credit).
Since both the aspects are recorded, must be equal, possibility of committing error is
reduced and the detection of errors becomes easy..
  POSTING
Process of transferring the transactions recorded in the books of original entry in the
respective accounts opened in ledger.
It can be done weekly, fortnightly or monthly or as per convenience.
Opening entry is posted as previous balances brought forward in the current books as-:
To balance b/f (for debit side balance)
By balance b/f ( for credit side balance)
LEDGER
After recording the transaction in the journal, transactions are transferred in the respective
accounts opened in the ledger.
A ledger is a principal book which contains all the accounts( Assets A/c, Liabilities A/c,
Capital Accounts, Revenue Accounts, Expenses Accounts).
Ledger is the ultimate destination of all transactions, known as the Book of Final Entry.
FORMAT OF A LEDGER

………Name of Account……….. Ledger Folio

No………..
Dr. Cr.
Date Particulars Folio Amount Date Particular Folio Amount
s
TO balance ….. By ….
c/d Balance
C/d

Necessity of Posting:

 To know the net effect of various transactions during a given period on a particular amount.
USES OF LEDGER
It provides complete information about all accounts in one book.
It enables to ascertain what the main items of revenues are.
It enables to ascertain the items of expenses.
It enables to ascertain what the assets are and of what values.
It enables to know about the liabilities and their amounts.
It facilitates preparation of final accounts.
  BALANCING

After posting, next step is to find out the net effect of all transactions posted to an account
during a given period.
The process of ascertaining the difference between the total of debits and total of credits
appearing in an account is known as balancing of an account.
If the total of debit amount column is more, the difference will be known as debit balance.
Put the debit balance on the credit side (shorter side) as ‘By Balance c/d’.
And in case of Credit balance, write excess amount on debit side as ‘To balance C/d’.
TRIAL BALANCE
It is a statement which shows either the Balances or Total Amounts of Debit Items and
Credit Items of all accounts in the Ledger and the Cash and Bank Balances.
A trial balance is a statement not an account.
It is prepared on a particular date and not for a particular period.
It is prepared to ascertain the arithmetical accuracy of ledger accounts.
It helps in locating errors when trial balance is untallied.
It facilitates the preparation of financial statements. No need to check ledger.
SOME ERRORS ARE EVEN NOT DETECTED FROM TRIAL
BALANCE: A TALLIED TRIAL BALANCE IS NOT CONCLUSIVE
PROOF OF ACCURACY

Error of Principle
Compensating error
Error of complete omission
Error of recording in the books of original entry
Posting correct amount on correct side but in wrong account
METHOD OF PREPARING TRIAL
BALANCE WITH
Balance Method (FORMAT)
FORMAT
TRIAL BALANCE…..(NAME OF THE ENTERPRISE)
AS AT….(DATE ON WHICH THE TRIAL BALANCE IS
BEING PREPARED)
S. Name of Account L.F Debit Balance Credit balance
No.

1. Purchases A/c
Sales A/c
Purchase Returns A/c

Total
TOTAL AMOUNT METHOD
(FORMAT)
TRIAL BALANCE…..(NAME OF THE ENTERPRISE)
AS AT….(DATE ON WHICH THE TRIAL BALANCE IS BEING
PREPARED)
s.no. Name of Account L.F Total of Debit Items Total of Credit
items

Tota ------- -------

l
Trial Balance by Balance Method Trial Balance by Total Amount Method

a) It can be prepared only when all the ledger accounts a) It can be prepared immediately after the
have been balanced. completion of posting from Journal to the ledger.

b) It shows the balances of all the accounts in the ledger. b) It shows the total amounts of debit side items
and credit side items in each ledger account.
ILLUSTRATION :
BY BALANCE METHOD
BY TOTAL AMOUNT METHOD