ACCOUNTING RECORDS

JOURNAL
Dr Pritika S Baliyan
 Steps in the Accounting Cycle
1. Collecting and
Recording
7. Close the 2. Journalize
accounts transactions

6. Record and
post adjusting 3. Post
entries transactions to
general ledger
5. Prepare
financial 4. Prepare
statements work sheet(analysing)
LO6
 Journalize
transactions
• Journal: mean a day book or daily record. the
transactions are first recorded in chronological
order (as and when they take place).

• It is a book of prime, original or first entry.

• Journal is helpful in the preparation of accounts

in the ledger
 Format of Journal
• The process of recording transactions in
journal is termed as “Journalizing”.

• The General Journal [ Journal ] identifies

which accounts are going to be debited
and which accounts are going to be
credited and creates a complete record of
this information.
 Source documents
• Business need to have a proof of
transactions that occur.
• Every business transaction is initially
recorded on a Source document
• S.D is a point of original entry of a
transaction & should provide the
information necessary to record the
transaction accurately.
 There are 3 rules for recording
the transactions
Assets Accounts
• Debit An increase
• Credit A decrease

• Capital Account
• Debit A decrease
• Credit An increase

• Liabilities Accounts
• Debit A decrease
• Credit An increase
 POINTS TO BE NOTED WHILE
PASSING JOURNAL ENTRIES
• The various accounts are classified
into 5 categories:
• 1) Assets Account
• 2) Liabilities Accounts
• 3) Capital Accounts
• 4) Expenses and losses Accounts
• 5) Income and Gains Accounts
 COMPOUND ENTRY
• When ever two or more transactions of the
same nature (i.e. transactions where either
the account to be debited or the account to
be credited is common) take place on the
same date a composite or compound or
combined journal entry may be passed for
them instead of passing separate journal
entry for cash of them.
 Illustration

• Let us Journalize the following transaction

s:
• 1 Nov, Started business with p5000 in
cash
• 2 Nov, Bought office furniture by cheque
p500.
• 5 Nov, Bought shop fixtures on credit from
tau Ltd. p200
 Transactions
• 8 Nov, Sold goods on credit to K gibson
p100.

• 9 Nov, Paid salaries in cash p 2000.

• 13 Nov, Paid Tau Ltd a cheque for p 150.

• 15 Nov, Received commission from ABC

Ltd in cash p 500
 JOURNAL ENTRIES
Date Particulars L. F. Debit Credit
1 Nov Cash A/c GL 1 5000
To capital A/c 5000
( capital invested in business)
2 Nov Office furniture A/c 500
To bank A/c 500
( furniture bought through bank)
5 Nov Fixtures A/c 200
To Tau Ltd A/c 200
(bought fix on credit from Tau
Ltd)
8 Nov K Gibson A/c 100
To Sales A/c 100
(goods sold on credit to Gibson)

9 Nov Salaries A/c 2000

To cash A/c 2000
(salaries paid in cash)
 COMPOUND JOURNAL
• 4 Nov, Goods sold to kingston p 200, G wood
p 390, and to D small p 410.
• 9 Nov, M Mills who had bought goods worth p
3000 paid p 2700 in full settlement of his
account.
• 11 Nov, paid for charity p 300
• 11Nov, paid for stationary p 500
• 11Nov, paid for postage p 700.
• 13Nov, A bill of p 1000 was discounted by the
banker for p 920.
 COMPOUND JOUN. ENTRIES
Date particulars LF Debit Credit
4 Nov Kingston A/c 200
G wood A/c 390
D small A/c 410
To sales A/c 1000
(Goods sold to K, G, D on credit)
9 Nov Cash A/c 2700
Discount A/c 300
To M Mills A/c 3000
(cash received from mills and
discount allowed)
11No Charity A/c 300
v Stationary A/c 500
Postage A/c 700
To cash A/c 1500
(cash paid for these)
13No Bank A/c 920
v Discount A/c 80
To bill Receivable A/c 1000
END OF CHAPTER