Journal entry is first step in accounting. Journal entry is the book of original entry and it is recorded in chronological order as and when transactions take place. Recording in journal is called journalizing.
Journal is a date-wise record of all the transactions with details of the accounts debited and credited and the amount of each transaction. Journal entry is first step in accounting.
This entry is the first step in the accounting process. Journal is used for recording the financial transactions.
Journal Entry Sample
Journal Entry Format is given which is generally used in the accounts.
Steps in Journalizing -Journal entry is first step in accounting
Journal entry is first step in accounting. In Double entry journal the common steps are as follows-
The process of analyzing the business transactions under the heads of debit and credit and recording them in the Journal is called Journalizing. General Journal Entry Form is used as important steps for recording a transactions in the books. An entry made in the journal is called a ‘Journal – Entry’.
Journal entry is recorded two ways, one method is simple entry and other one is compound entry.
Normally, in recording journal entry the below mentioned steps are t be followed.
Step 1 First determine the two accounts which are involved in the transaction.
Step 2 Classify the above two accounts to Personal, Real or Nominal.
Step 3 Find out the rules of debit and credit for the above two accounts.
Step 4 Identify which account is to be debited and which account is to be credited.
Step 5 Record the date of transaction in the date column. The year and month is written once, till
they change. The sequence of the dates and months should be strictly maintained.
Step 6 Enter the name of the account to be debited in the particulars column very close to the left
hand side of the particulars column followed by the abbreviation Dr. in the same line.
against this, the amount to be debited is written in the debit amount column in the same
Step 7 Write the name of the account to be credited in the second line starts with the word ‘To’ a
few space away from the margin in the particulars column. Against this, the amount to
be credited is written in the credit amount column in the same line.
Step 8 Write the narration within brackets in the next line in the particulars column.
Step 9 This step is for convenient purpose to draw a line across the entire particulars column to
separate one journal entry from the other.
Transaction analysis for journal entries
In any business transactions should be analyzed through the following three steps to write correct journal entry.
- The accounts affected by the transactions have to be identified
- The identified accounts should be classified as to personal or real or nominal account.
- The accounts to be debited and credited should be decided on the basis of accounting rules, i.e., debiting and crediting.
Advantages of journal entry
The advantages of the journal entry is as follows-
- Journal recording reduces the possibility of errors
- It also provides explanation of the transactions
- It provides a chronological record of the all transactions.
- Journal Entry for Payroll
- Based on journal entry, ledger account is prepared. Hence it is first step in the accounting.
Originally posted 2015-03-19 00:33:02.