ACCOUNTING BOOKS AND RECORDS | TYPE OF JOURNALS

ACCOUNTING BOOKS AND RECORDS

While analyzing the review of accounting cycle, the whole process of accounting consists of the following important stages.

1. Recording the transactions are done through Journal or Subsidiary Books.
2. Classifying the transactions are achieved by Ledger.
3. Summarizing the transactions are done through Trial Balance.
4. The last stage is concerned with preparing Income Statements (Trading, Profit and Loss Account and Balance Sheet).

JOURNAL

A journal is a record that keeps accounting transactions in chronological order i.e. as they occur. All accounting transactions are recorded through journal entries that show account names, amounts, and whether those accounts are recorded in debit or credit side of accounts. A journal entry is called "balanced" when the sum of debit side amounts equals to the sum of credit side amounts.

·         Journal is a book in which day to day transactions are recorded

·         It shows which a/c is debited or which is credited.

·         In Journal, record of the each transaction is called Journal Entry.

·         Process of recording in the journal is called Journalizing.

SPECIMEN RULING OF JOURNAL

Column 1: In indicates the date, month and year on which each transaction takes place.

Column 2: It represents (a) name of account to be debited;(b) name of account to be created.

Column 3: L.G. Stands for Ledge Folio, i.e. reference to the main book.

Column 4: Dr. Stands for Debit, i.e. amount to be debited.

Column 5: Dr. Stands for Credit, i.e. amount to be credited.

TYPE OF JOURNALS

Journal broadly classified into (1) General Journals and (2) Special Journals. Special Journals are subsidiary books which are as follows:

1.    Sales Book

2.    Purchases Book.

3.    Purchase Returns Book

4.    Sales Returns Book

5.    Bills receivable Book.

6.    Bills Payable Book.

7.    Cash book

Following books to be considered before making journal entry:

(1) Capital Account: The initial influx of capital in the form of cash provided by the proprietor is known as capital, It may be further converted into plant and machinery, building etc. Hence it should be debited to cash A/c or plant & machinery property a/c and credited to proprietor’s A/c.

(2) Drawing Account : When proprietor withdrawn money or good from business for personal use, it should be debited to drawing A/c and credited cash A/c or purchase A/c

(3) Goods Account: If any transactions relating to purchase or sale of goods, instead of Making journal entries in one goods account , separate accounts may be maintained as sales A/c, Purchase A/c, sales Returns A/c, and Purchase Returns A/c.

a.    Sales Account: is meant for recording sale of goods. It should be credited to sales A/c.

b.    Purchase Account: is meant for recording purchase of goods. It should be debited to purchase A/c.

c.    Sales Returns Account: is concerned with recording return of the goods from customers. It should be debited to sales return A/c.

d.    Purchase Return Account: is meant for recording purchased goods return to suppliers. It should be credited to Purchase Return A/c.

(4) While making journal  entry, a brief explanation will be given is known as “Narration”

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