A journal is a book in which transactions are recorded in the order in which they occur i.e. chronological order. A journal is called a book of prime entry or original entry, because all the business transactions are entered first in this book. The process of recording a transaction in journal is called journalizing. The entry made in the journal is called journal entry.
Advantages of journal entries
A. Chronological order
Transaction are recorded in a chronological journal. Hence, when any information is required, the information can be traced out quickly and easily.
B. Explanation of transaction
Each journal entry entered in the journal gives brief narration explanation of the transaction. Such as invoice no. For purchased or sales, cheque no. For receipt payment by cheques etc.
C. Record of both aspects
Both debit and credit aspect of a transaction are recorded in journal. Since the amount recorded in debit amount column and credit amount to column must be equal. Therefore the possibility of committing errors is reduced and the detection of errors, if any, committee become easy.
No comments:
Post a Comment