2.12. Accounting books
2.12.1. Journals or books of prime entry
The primary function of the journals is to serve as formal
connecting link between the source document of a transaction and the
appropriate ledger accounts. The journals provide a chronological history of
the transactions engaged in by a business firm. They provide more information
regarding a transaction more than the ledger accounts and they show clearly the
dual effect of each transaction. Journals are some times referred as
daybooks.
The journal is used to describe the process of recording the
various aspects of a transaction in one or more books of primary entry. A
journal entry or the recorded transaction in a journal should include the
following information:
Date of the transaction
Name of the account to debited and credited Amount to be debited
and credited
A brief narration or explanation of the transaction
The journal will also contain a column for posting references
or folio. This column will show which account numbers in the ledger the various
entries have been posted. A general journal or journal proper is illustrated
below. It is the simplest form of journal which uses two column formats. In a
small business organization, a general journal serves the purpose of recording
all accounting transactions.
General journal
|
Date
|
Description
|
Folio
|
Debit
|
Credit
|
As shown above, the general journal contains the following
columns:
Date column: The date of the transaction is
entered in this column, the year, month and date. It is not necessary to repeat
the year and the month on the same journal page.
Description column: This column contains the
debit and credit accounts and the brief explanation of the transaction. The
account debited is written first and the account credited is written on the
following line intended a little bit so as to distinguish it from the debit
account. On the next line a concise explanation of the journal entry is
written.
Folio column: This is posting reference
column. It contains the ledger page or code number of the account into which
the journal entry has been transferred or posted. This column is left blank at
the time of journalizing and is filled in only when the posting is done from
the journal to the ledger accounts.
Debit column: This column is for the amount
debited.
Credit column: This column is for the amount
credited.
2.12.2. Subsidiary journals or daybooks
These are journal which contain daily records or voluminous
transactions of highly routine and respective nature such as credit sales,
credit purchases, returns of goods, cash receipts, and cash disbursements. E.g.
each special journal is reserved for a particular type of document transactions
data as it is shown below:
|
Special or subsidiary journal
|
Source document transaction data
|
1. cash payment journal
|
Payment of cash
|
2. cash receipt journal
|
Receipt of cash
|
3. Petty cash book
|
|
Petty or minor cash disbursement
|
|
|
4.Three column cash book
|
Receipts and payments of cash, cheques including a record of
each discount allowed and received.
|
5. Analysis cash book
|
Multi columnar record of receipts and payments of cash and
cheques.
|
6. Sales journal
|
Sale of merchandise or goods on credit.
|
7. Sales return journal
|
Return of goods previously sold on credit.
|
8. Purchase journal
|
Purchase of merchandise or goods on credit.
|
9. Purchase return journal
|
|
Return of goods to supplies previously bought on credit.
|
|
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