journal entries

A business entity enters into a lot of transactions daily in the course of its business e.g. Purchase of raw materials; sale of goods; payments of expenses like salaries, wages, commissions, fees, rent taxes; receipt of many non operating incomes like rent; interest on investments; royalty; apprenticeship premium; commissions etc. Some transactions involves a very small amount and some involves a big amount. Each transaction influences the profits of the business.In business you have to take into account all these transactions if you want to find out the results of the business. And hence you should record all the transactions properly on regular basis.

This purpose is achieved by the book called JOURNAL. The word “Journal” means “Daily”. Thus as is clear from the name itself, Journal is a book in which you keep arecord of all the transactions on a daily basis. All rthe transactions are entered into this book in a chronological order i.e. in the order of time. For example the transaction taking place on 2nd march is recorded before the transaction which took place on 5th march.

The process of recording the transaction in the Journal or making entry in the journal is called Journalizing. Since transactions are first of all recorded in this book, Journal is also called “The Book Of Original Entry’. Entries in the Journal are recorded on the basis of source Documents like Cash Memos, Vouchers etc which serve as an evidence of a transaction. Entries in the Journal are made on the basis of ‘ Rules Of Journalizing’.

As in accounting there are some specified formats for all types of accounting statements or accounts etc , Journal also has a format of its own which is given as under.

Date Particulars L.F Debit amount Credit amount

Explanation of all the columns of Journal

1. Date ————— Under this column we write the date on which the transaction occurred.
2. Particulars———- Under this column some brief explanation of the accounts to be debited and credited is given.
3. L.F.——————- L.F. means Ledger Folio. Ledger is book in which we keep an account under a separate name for all types of accounts. Folio means page number. So L.F. means the page number in Ledger on which that particular account exists.
4. Debit Amount—– In this column we record the amount against the account which has been debited.
5. Credit Amount—- In this column we record the amount against the account which has been credited.


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