Journal - The book of account

The word journal means a diary or a day book. In older days all monetary transactions were recorded in chronological order in the journal book based on golden rule of accounting. However in modern accounting systems the journal is mainly classified into three categories –

• The General Journal.
• Sales and Purchase Day Books or Journals
• Sales Return and Purchase Return Books or Journals.

1. The General Journal is used for recording —

• Opening Entries
• Closing Entries, and
• Transaction of a special nature

The amount shown in the debit column of the journal entered on the debit side of the ledger and the amount shown in the credit column of the journal are entered on the credit side of the ledger.

2. Sales and Purchase Day Books or Journals.

Each credit sale are entered in the Sales Day Book or Journal with such details as are required e.g. date, name, invoice no., amount, discount allowed etc. The personal account of buyers are posted to the debit side of each buyer’s account and the total amount of sale for the respective period is credited to sales following the golden rules to debit the receiver and credit what goes out.

3. Sales Returns and Purchase Returns Day Books or Journals

These books or journals record sales and purchase returns. When goods already sold are returned by the buyer, they are recorded in Sales Return Day Book. Similarly when good purchased are returned to the buyer they are recorded in Purchase Return Day Book. These journals occupy the converse position to the Journals or Day Books. Thus in case of Sales Return Day Book, Sales or Return Inward A/c. is debited and the Personal A/c. is credited. Similarly, when purchases are returned Purchase A/c is credited & Personal A/c is debited.