Introduction:- The word ‘Journal means’ a daily record. Journal is derived from French word ‘Jour’ which means a day. It is a book of original or prime entry written up from the various sources documents. Every transaction is recorded in the first instance and than it is posted to the ledger. The form in which it is recorded is called journal entry and recording or entering a transaction in the journal is known as Journalizing.
Rules of Journalizing:- The process of passing an entry in a journal is called Journalizing. The rule for Journalizing is same as that of rules of debit and credit. It is based on two facts. First is accounting equation and other is accounting approach.
1.) Based on Accounting Equation:-
a) Increases in assets are debits, decreases are credit.
b) Increased in liability are credit, decreases are debits.
c) Increases in capital are credits, decreases are debits.
d) Increases in profits are credits, decreases are debits.
e) Increases in expenses are debits, decreases are credits.
2.) Based on Traditional Approach:-
a) Debit the receiver, credit the giver
b) Debit what comes in, credit what goes out.
c) Debit all expenses and losses, credit all income and gains.
Following transactions are still recorded in the journal:
1. Opening entries:- At the beginning of the year, the opening balances of assets and liabilities are journalized.
2. Closing Entries:- At the end of the year final accounts are prepared. For preparing these accounts various are to be transferred to the trading and profit and loss account which is done by means of journal entries.
3. Rectification entries:- When any error is detected in writing up the books then it is rectified by means of suitable journal entry.
4. Adjustment entries:- Since accounting follows “accrual concept” therefore adjustment has to be done at the end of the year regarding:
a) Expenses incurred but not paid,
b) Expenses paid but benefit to be available in the next period,
c) Income becoming due but not received,
d) Income received in advance, and
e) Charging depreciation on fixed assets, etc.
5. Transfer entries:- If any amount is to transferred from one ledger account to the other, then it is done by means of journal entries.
6. Miscellaneous entries:-
a.) Purchase and sale of fixed asses on credit,
b.) Writing off of losses due to bad debt, fire, accidents etc,
c.) Any extra concession to be allowed to any customer or any charge to be levied after the issue of the invoice, and
d.) Any other item for which no subsidiary book has been maintained.
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