15/04/2020 3 By indiafreenotes

In accounting and bookkeeping, a journal is a record of financial transactions in order by date. Traditionally, a journal has been defined as the book of original entry. The definition was more appropriate when transactions were written in a journal prior to manually posting them to the accounts in the general ledger or subsidiary ledger.

Examples of Journals in a Manual Accounting System

Manual systems usually had a variety of journals such as a sales journal, purchases journal, cash receipts journal, cash disbursements journal, and a general journal.

Computerized Accounting Systems

With today’s computerized accounting systems, the recording and posting of most transactions will occur automatically when sales and vendor invoice information is entered, checks are written, etc. In other words, accounting software has eliminated the need to first record routine transactions into a journal. However, even with computerized accounting systems it is necessary to have a general journal in which adjusting entries and unique financial transactions are recorded.

Journal in accounting is named as the book of original entry. It’s called the book of original entry because if any financial transaction occurs, the accountant of a company would first record the transaction in the journal. That’s why a journal in accounting is very important for anyone to understand. No matter who you are, a would-be accountant, a finance enthusiast, or an investor who would like to understand the inherent transactions of a company, you need to understand how to pass a journal entry before anything else.

Double-entry system

Double entry system is the system that is used to record entry in the journal. Let’s understand what double entry system is. The double entry system is a system that has two parts debit and credit. If you know what a debit and what a credit are, you would be able to understand the entire financial accounting quite effectively.

  • Debit the account when assets and expenses increase
  • Debit the account when liabilities and revenues decrease
  • Credit the account when assets and expenses decrease
  • Credit the account when liabilities and revenues increase