Concept And Meaning Of Journal
Accounting process starts with the identification of financial transactions of a business. Such financial transactions are recorded permanently in the books of accounts systematically in different specialized books. These books of accounts are called journal.
The journal is an important book under the double-entry system. Journal is the first book of systematic record of the financial transactions of the business. Journal is called the book of original or prime entry, because its financial transactions are first of all recorded in this book as and when they take place. Journal is also called a subsidiary book as it is maintained to help prepare the main book called the ledger. The journal is prepared with the help of memorandum or waste book, which is a rough and temporary record of the financial transactions of the business.
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 subsidiary book in which the financial transactions of the business are systematically recorded in order of their occurrence.
Objectives Of The Journal
The following are the main objectives of the journal
* Journal is prepared to keep a systematic record of financial transactions.
* Journal is prepared to show financial transactions in chronological order.
* Journal is prepared to present necessary information about the financial transactions.
* Journal is prepared to use as a legal evidence of financial transactions.
* Journal is prepared to facilitate the preparation of ledger book
What is Journalising ?
In simple words, journalising is an act of recording financial transactions in the journal book. It is a process of systematic recording of financial transactions in the book of prime or original entry.
The following steps are taken while journalising the transactions in the journal book.
* To identify the two aspects of the transaction.
The following steps are taken while journalising the transactions in the journal book.
* To identify the two aspects of the transaction.
* To identify the appropriate accounts for the two aspects of the transactions.
* To debit and credit the accounts relevant to the transaction by using the rules of debit and credit.
* To write the entry in the journal in chronological order. Such an entry is called journal entry.