what is Journal ? why is it prepared Discuss the rules of Journalising & give its proforma.
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Answer:
Explanation:
In accounting and bookkeeping, a journal is a record of financial transactions in order by date.
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The Importance of Keeping a Journal in Accounting
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The Importance of Keeping a Journal in Accounting
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BY LAHLE WOLFE Updated October 04, 2019
A journal entry is the record of a financial transaction entered into a journal. The journal details all the financial transactions of the business and it makes note of which accounts these transactions affected. All journal entries are made using either the double entry or single entry method of bookkeeping.
Journal entries are typically entered in chronological order and debits are entered before credits – debits are entered in a column to the left, and credits are entered to the right. Journal entries are assigned to specific accounts using a chart of accounts, and the journal entry is then recorded in a ledger. The ledger keeps track of multiple accounts.
The Purpose of Journal Entries
Journal entries provide foundational information for all of a business's other financial reports. They're used by auditors to analyze how financial transactions impact a business.
Journalising is an act of recording the debit and credit aspects of a business transaction in journal, together with an explanation of the transaction, known as Narration.
Journal
1. The date column is meant for recording the date of the transaction.
2. The second column is meant for recording the accounts to be debited and credited.
3. The third column is meant for recording the page number of the ledger, where the entries are posted.
4. In this column, we write the amount to be debited against Dr.
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5. In this column, we write the amount to be credited against Cr.
In the second column, within brackets, a brief explanation of the transaction is written, which is known as narration.
Journal are prepared to record the detail information regarding all the transaction for the future uses.
The series after recording the transaction is:
1. Journal entry.
2. Ledger accounts.
3. Trail balance.
4. Final accounts.
5. Balance sheet.
As the entry first get recorded in the journal and on the basis of that the following accounts and prepared . In short journal are the backbone of accounting. for recording the journal entry one should follow the double entry book-keeping accounting system.
Rules of journalizing:-
1. One transaction should have two sides ( debit and credit) as the effect is shown on the two accounts.
2. Debit and Credit should be equal.