Journal: A journal is often referred to as Book of Prime Entry or the book of original entry. In this book transactions are recorded in their chronological order. The process of recording transaction in a journal is called as ‘Journalisation’. The entry made in this book is called a ‘journal entry’. Journal is the book of primary entry in which every transaction is recorded before being posted into the ledger.

It is that book of account in which transactions are recorded in a chronological (day to day) order. In modern times, besides the main journal, specialized journals are maintained to record different types of transactions. The process of recording transactions in a journal is termed as journalising. A journal is generally kept in a columnar from. check out more details Advantages of Journal, Functions of Journal


(i) Date: The date on which the transaction has taken place is recorded here. The year is written at the top of the date column of each page of the journal. On the next line of the date column, the month & day of the first entry are written. Unless the month or year changes or until a new page is begun, neither the month nor the year is repeated on the page. Year and month are written in the under left hand sub-column and date is written is right hand smaller sub-column.

(ii) Particulars: The two aspects of a transaction are recorded in this column i.e. However, mostly there are no sub-column and year, month and date in one column of Date. the accounts which have to be debited and credited. The name of the account(s) to be debited is entered at the extreme left of the particulars column next to the date column.

The abbreviation ‘Dr.’ is written at the right end of the particulars column on the same line of the account debited. The name of the account to be credited is entered in the next line with a prefix ‘To’. A brief explanation of the transaction known as narration is written below the account titles of the transaction. Finally, a thin line is drawn all through the particulars column to indicate that the entry of the transaction has been completed.

(iii) L.F. (Ledger Folio): This column records the page number in the ledger in which the accounts in the particulars column are posted.


(iv) Debit Amount (Debit): The debit amount is recorded in the debit amount column opposite to the title of the account being debated.

(v) Credit Amount (Credit): The credit amount is recorded in the credit amount column opposite to the title of the account being credited.

Functions of Journal

  • (i) Analytical Function: Each transaction is analysed into the debit aspect and the credit aspect. This helps to find out how each transaction will financially affect the business.
  • (ii) Recording Function: Accountancy is a business language which helps to record the transactions based on the principles. Each such recording entry is supported by a narration, which explain, the transaction in simple language. Narration means to narrate – i.e. to explain. It starts with the word – Being …
  • (iii) Historical Function: It contains a chronological record of the transactions for future references.

Advantages of Journal

The following are the advantages of a journal:

  • (i) Chronological Record: It records transactions as and when it happens. So it is possible to get a detailed dayto-day information.
  • (ii) Minimizing the possibility of errors: The nature of transaction and its effect on the financial position of the business is determined by recording and analyzing into debit and credit aspect.
  • (iii) Narration: It means explanation of the recorded transactions.
  • (iv) Helps to finalize the accounts: Journal is the basis of ledger posting and the ultimate Trial Balance.

Classification of Accounts

(i) Personal Accounts: Personal accounts relate to persons, trade receivables or trade payables. Example would be the account of Ram & Co., a credit customer or the account of Jhaveri & Co., a supplier of goods. The capital account is the account of the proprietor and, therefore, it is also personal but adjustment on account of profits and losses are made in it. This account is further classified into three categories:

  • (a) Natural personal accounts: It relates to transactions of human beings like Ram, Rita, etc.
  • (b) Artificial (legal) personal accounts: For business purposes, business entities are treated to have a separate entities. They are recognised as persons in the eye of law for dealing with other persons. For example: Government, Companies (private or limited), Clubs, Co-operative societies etc.
  • (c) Representative personal accounts: These are not in the name of any person or organisation but are represented as personal accounts. For example: outstanding liability account or prepaid account, capital account, drawings account.

(ii) Impersonal Accounts: Accounts which are not personal such as machinery account, cash account, rent account etc. These can be further sub-divided as follows:

  • (a) Real Accounts: Accounts which relate to assets of the f rm but not debt. For example, accounts regarding land, building, investment, f xed deposits etc., are real accounts. Cash in hand and Cash at the bank accounts are also real.
  • (b) Nominal Accounts: Accounts which relate to expenses, losses, gains, revenue, etc. like salary account, interest paid account, commission received account. The net result of all the nominal accounts is ref ected as prof t or loss which is transferred to the capital account. Nominal accounts are, therefore, temporary.


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