Unit-2 The Accounting Process

This unit discusses how various transactions are recorded in the Journal and how they will be posted into the concemed ledger accounts.

What is Journal?

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Learning Pundits Content Team

Written on Apr 16, 2019 12:27:06 PM

  • Journal is a daily record of business transactions, It is also called a 'Day Book' and is used for recording all day today transactions in the order in which they occur. It is a book of prime entry (also called book of original entry) because all transactions are recorded first in. this book. The process of recording a (transaction in the journal is called 'Journalizing' and the entries made in this book-are called ‘Journal Entries'.
  • The Journal is divided into five columns. The first column is used for writing the date of the transaction. It is customary to write the year at the top of the column only once and then in the next line the month and date are written.
  • The second column called 'Particulars' column, The names of the two accounts affected by the transaction are to be recorded in this column. The name of the account to be debited is written first. The abbreviation 'Dr’, for debit is also written against the name of the account to be debited. It is written on the same line very close to the L. F. column. In the next line, the name of the account to be credited is written. It is always preceded by the word 'To'. It is not necessary to write 'Cr.' against the name of the account to be credited. In the next line, a brief description of the transaction is also given within brackets. It is called 'Narration'. After writing the narration a line is drawn in the particulars column to separate one entry from the other.
  • The third column L. F. (Ledger Folio) is meant for writing the page number of the ledger where the concerned account appears. This column is filled at the time of posting into the ledger. The fourth and the fifth columns are meant for recording the amounts with which the two accounts have been affected, The amount to be debited is entered in the debit amount column against the name of the account debited, and the amount to be credited is entered in the credit amount column against the name of the account credited. Both the amounts will always be equal.