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Journal

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Published in: Accountancy | Commerce Subjects
5,340 Views

Explains the basics of Book Keeping and Primary Books. 

Dr.Amit G / Delhi

22 years of teaching experience

Qualification: Ph.D ( - 2012), M.Com ( - 2002), MBA/PGDM ( - 2010), B.Com ( - 2000)

Teaches: Accountancy, Economics, Costing, Financial Management, Statistics, BBA Subjects, Management Subjects

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  1. Journalising Transactions
  2. Chapter Objectives ' Identify the stages of accounting cycle ' Appreciate the role of journal in recording business transactions ' Understand the rules of debit and credit applicable to different type of business transactions ' Describe the various categories of accounts ' Pass appropriate entries for recording transactions in the journal 1/10/2018 Dr. Amit Gupta
  3. Accounting Cycle The stages involved in accounting cycle are: — Creating Journal for recording transactions — Creating Ledger for classifying the transactions recorded in Journal — Preparing Trial Balance, Trading Account, Profit and Loss Account and Balance Sheet for summarising the results of transactions — Computing accounting ratios for determining the liquidity, solvency and profitability of business 1/10/2018 Dr. Amit Gupta
  4. Journal ' Journal is a book that records all daily transactions in the chronological order of date. ' It is also known as book of original entry. The process of recording a transaction in Journal is known as Journalising. Debit Credit Date Particulars 1/10/ 018 Dr. A •t Gupta
  5. Types of Transactions All the business transactions are categorized into three types: — Transactions related to persons — Transactions related to properties and assets — Transactions related to income and expenses ' Depending upon the types of transactions, the accounts under which the transactions are recorded are classified into personal, real and nominal accounts. 1/10/2018 Dr. Amit Gupta
  6. Personal Accounts ' Personal account includes accounts of persons and organizations with whom the business deals. Types of personal accounts: — Natural personal accounts: It includes accounts of persons such as John's Account. — Artificial personal accounts: It includes accounts of organizations such as accounts of company, club and Government. — Representative personal accounts: It includes accounts that represent a group of persons such as outstanding salaries account for employees. Rule of debit and credit — Debit the receiver — Credit the giver 1/10/2018 Dr. Amit Gupta 6
  7. Real Accounts Real accounts represent accounts of properties and assets. Types of real accounts: — Tangible real accounts: It represents accounts of things that can be touched or measured, such as cash account, furniture account and stock account. — Intangible real accounts: It represents accounts of things that cannot be touched, such as patent account and goodwill account. Rule of debit and credit: — Debit what comes in — Credit what goes out 1/10/2018 Dr. Amit Gupta
  8. Nominal Account Nominal accounts represent accounts for incomes, gains, expenses and losses. Example: rent account, rates account , insurance account, loss by fire account. ' Rule of debit and credit: — Debit all expenses and losses — Credit all incomes and gains 1/10/2018 Dr. Amit Gupta
  9. Classification of Goods Account ' Goods are the objects purchased by the business for resale, Accounts related to goods are classified into: — Purchases account: It records all purchases of goods and the account is debited on purchasing the goods. — Sales account: It records the sales of goods and the account is credited on selling the goods. — Purchases returns account: It records the return of goods purchased and the account is credited on returning the purchased goods. — Sales returns account: It records the return of goods sold and the account is debited on receiving the sold goods. 1/10/2018 Dr. Amit Gupta 9
  10. Passing Entries to Journal ' Illustration: John starts a business with capital of Rs. 20,000 on Jan 1, 2000. He purchased furniture for cash of Rs. 5,000 on Jan 5, 2000. He paid rent for business premises of Rs. 2,000 on Jan 10 2000. Date 2000 Jan 1 Jan 5 Jan 10 1/10/ Particulars Cash Account To Capital Account Dr. (Being commencement of business) Furniture Account To Cash Account (Being purchase of furniture) Rent Account To Cash Account (Being payment of rent Dr. Dr. Debit 20,000 5,000 2,000 Credit 20,000 5,000 2,000

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