Journal Entries

Name the four parts of a journal entry.

1. Date of Transaction 2. Debited account 3. Credited Account 4. Explanation (mention details of transaction)

4 steps to journalizing

1. Record date. 2. Record debited account 3. Recorded credited account 4. Record explanation of transaction

5 advantages of Journals

1. Records complete transaction in one single place, uses double-entry principle 2. Reduces number of errors (less likely to make mistakes when journalizing and able to notice mistakes easily if they are made). 3. Shows chronological history of business transactions (identify high expenses) 4. Shows the number of transactions per day (so identifies VOLUME of business + busy periods) 5. Shows convenient snapshot of DAILY business activities.

5 Types of Journals

1. Sales Journal 2. Cash Receipt Journal 3. Purchases Journal 4. Cash Disbursement Journal 5. General Journal

Why is a journal sometimes called a Book of Original Entry?

Because a journal is where transactions are first recorded from the SOURCE DOCUMENTS.

In what order do entries appear in a journal?

By chronological order (order in which the transactions happen)

Which part of a journal entry is indented?

Credited account

Journal Entry

Each transaction recorded in a journal

Explain the principle of double-entry accounting.

For every debit AMOUNT , there must be an equal credit AMOUNT. Total debits must equal total credits. When recording a transaction, at least 2 accounts must be affected.

Extra

Journal entries can be completed by hand (journal paper) or by computer (Excel)

Journal

Record of transactions in chronological order (usually by date).

Journalizing

The process of recording transactions in a journal.

Journal's purpose

To have a record of all the parts of a transaction in one place