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    Journal


    Journal
    The word ‘Journal’ has been derived from the French word ‘JOUR’ means daily records. Journal is a book of original entry in which transactions are recorded as and when they occur in chronological order (in order of date) from source documents. Recording in journal is made showing the accounts to be debited and credited in a systematic manner.
    In the words of E. L. Kolher, “A Journal is a chronological record of accounting transactions showing the names of the accounts that are to be debited or credited, the amounts of debits and credit, and any useful supplementary information about the transactions. It is analogous to a diary.”
    Thus, the journal provides a date-wise record of all the transactions with details of the accounts and amounts debited and credited for each transaction with a short explanation, which is known as narration.
    Features of Journal
    The following are the main characteristics of Journal:
    a)      Journal is a book of original entry.
    b)      Transactions are recorded in the journal as and when they occur, i.e., the record is chronological.
    c)       Journal is so ruled that all the transactions can be passed through it.
    d)      The process of recording transactions in the journal is called journalising. In order to journalise a transaction, it is necessary to analyse it so that we may know which account is to be debited and which account is to be credited. Therefore, the term journalising includes both the analysis of a transaction and its actual recording in the journal.
    e)      Any entry made in the journal is called 'Journal Entry'.
    f)       Journal contains all non-cash transactions which have taken place during the accounting period.

    Advantages of Journal:
    The chief advantages of the use of the journal are the following:
    a)      The possibility of errors is reduced. Since the amounts to be debited and credited are written side by side, the two can be compared to see that they are equal. If the accounts are written up directly it is possible that a wrong amount may be written or the amount written on the debit side may be more or less than on the credit side.
    b)      Along with the entry in the journal a complete explanations is written so that later it would be possible to understand the entry property.
    c)       Transactions are entered in to journal in the chronological order hence the order in which they occur inters the records permanently.

    Limitations of Journal
    It is possible to record every transaction in the journal. This however may make it unwieldy. Therefore the usual practice is to have separate journals or books for different classes of transactions. The reasons for this are the following.
    a)      The journal will be too long if all transactions are recorded there.
    b)      Firms like to ascertain the cash balance everyday; hence they usually record cash transactions directly in a separate book. This obviated the necessity of journalizing cash transactions.
    c)       By recording different classes of transactions in different books, book-keeping and accounting becomes easier, since, then, entries can often be made in totals.
    Format of a Journal
    Date
    Particulars
    L.F
    Debit (Rs)
    Credit (Rs)






    As is clear from the format of a Journal, it contains 5 columns . These are explained below :
    a)      The first column is for Date, wherein the date of the transaction is written.
    b)      The second column is for the Particulars of the transaction, wherein the names of the accounts involved in the transactions are written in a logical manner.
    First the account to be debited is written with the words `Dr.` following it. In the next line, after leaving a little space, the name of the account to be credited is written preceded by the word `To` In the next line, the explanation of the entry together with details is written in brackets. This is called Narration.
    c)       In the third column, L.F means Ledger Folio. It is the number of the page in the Ledger where the respective account will be entered.
    d)      The fourth column is named Debit (Rs.). In this column the amounts to be debited to various accounts is entered.
    e)      The fifth column i.e. Credit (Rs.) is meant for entering the amounts to be credited to various accounts.

    Journalizing
    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'.
    In the words of H. Chakraborty,” the technique of writing a transaction in its two-fold aspect with proper description in Journal is called Journalising.”

    The following steps lead to the preparation of a journal:
    a)      Identifying the Affected Accounts. First of all, the affected accounts in a transaction should be identified. For example, if goods worth Rs. 20,000 are sold for cash, then goods and ‘Cash’ are the two affected accounts.
    b)      Recognizing the Kinds of Affected Accounts. The kind of the affected accounts should be determined e.g. in the above case, ‘goods’ and ‘Cash’ are both asset accounts.
    c)       Applying the Rules of Debit and Credit. Then the rules of ‘debit’ and ‘credit’ should be applied to the affected accounts. These rules are given below:

    Rules of Debit and Credit
    Traditional Approach:
    Under this approach, Accounts are classified in to three namely real accounts, personal accounts and nominal accounts. There are separate rules for each type of accounts they are as follows
    1. Real accounts
    An account relating to an asset or property is called real account. Cash, furniture, plant and machinery etc are examples of real accounts the debit, credit rule applicable to real account is:
    Debit what comes in
    Credit what goes out
    2. Personal accounts
    It includes the account of person with whom the business deals. These accounts are classified in to three categories
    a) Natural personal accounts –the term natural persons mean persons who are creation of god. For e.g.;-Raja’s accounts, Guptha’s accounts etc
    b) Artificial personal accounts-these accounts includes accounts of corporate bodies or institutions
    c) Representative personal account-these are accounts which represents certain person or group of persons. For example salary due, rent outstanding etc. The rule of personal account is
    Debit the receiver
    Credit the giver
    3) Nominal accounts
    Accounts relating to expenses and losses and incomes and gains are called nominal accounts. Salary accounts, commission account etc are examples. The rule of nominal account is
    Debit all expenses and losses
    Credit all incomes and gains

    Modern approach:
    Under this approach accounts are classified into five categories namely Assets, Liabilities, Capital, Incomes & Gains and Expenses & Losses. There are separate rules for each particulars which are as follows
    Asset A/c
    :
    Increase Dr.
    :
    Decrease Cr.
    Liability A/c
    :
    Increase Cr.
    :
    Decrease Dr.
    Capital A/c
    :
    Increase Cr.
    :
    Decrease Dr.
    Revenue A/c
    :
    Increase Cr.
    :
    Decrease Dr.
    Expenses A/c
    :
    Increase Dr.
    :
    Decrease Cr.

    Types of journal Entries:  
    Entries recorded in the journal may be of two types.
    a)      Simple Journal Entry and
    b)      Compound Journal Entry
    Simple Journal Entry
    When a transaction affects only one aspect/account in the debit and one aspect/account in the credit. It is known as Simple Journal Entry. 
    Compound Journal Entry:
    If an entry contains more than one debit or credit or both, that entry is known as a compound journal entry. Actually, a compound journal entry is a combination of two or more simple journal entries.
    Thus, a compound journal entry can be passed in the following three ways:
    (i)      By debiting one account and crediting more than one account.
    (ii)    By crediting one account and debiting more than one account.
    (iii)   By debiting more than one account and also crediting more than one account.