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‡   First, all transactions should be

recorded in the journal or books of original
entry known as subsidiary books as and
when they take place.
‡  All entries in the journal of
books of original entry should be posted to
the appropriate ledger accounts to find out
at a glance the total effect of all such
transactions in a particular account.
‡ Ä

 Last stage is to prepare the
trial balance and final accounts with a view
to ascertaining the profit or loss made during
a trading period and the financial position of
the business of a particular date.
!

  
    
 
 ã 
‡ 
The word " " has been derived from
the French word "jour". Jour means day.
So journal means daily. Transactions are
recorded daily in journal and hence it has
been named so. It is a book of original
entry to record chronologically (i.e. in order
of date) and in detail the various
transactions of a trader.
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(ate Particulars L.F.
(r. Amount Cr. Amount
(1) (2) (3)

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‰ rite the name of the debtor or account to be debited in the first line and
the name of the creditor or the account to be credited in the next line

‰ rite the name of the account to be debited close to the line starting the
particulars column and that of the account to be credited at a short
distance from this line.

‰Use "(r" after each debit item and "To" before each credit. The term "Cr."
after a credit item is unnecessary, as if one account is debtor, the other
must be creditor.

‰To separate one entry from another a line is drawn below every entry to
cover particulars column only. The line does not extend to amount column.
 xample
‡ On first January, 1991 A started business with
capital of $20,000 and his transactions of the month
were as follows:
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‰ % |   The proprietor's account in the

business books is called "capital account".
‰ / |   Any cash or goods taken
away by the proprietor for his personal use are
called his drawings and are debited to "(rawings
Account".
‰ (   hen any customer is declared
insolvent and amount due from him is not
recoverable, it should be debited to Bad debts
account and credited to customer¶s account.
‰ !    It is allowed to the creditor by
the debtor as an incentive to the later to make an
early payment. Cash (iscounts are always
recorded in the book of accounts and a separate
account is opened in ledger. Being a nominal
account, it is debited with the loss and discount
allowed and credited with the gain on discount
received.
‰  0 |/ Sometimes goods are (a)
given away as charity (b) taken by the proprietor
for his private use (c) distributed free as
samples. Such goods are not sales. Therefore
they are not credited to sales account but are
credited to purchases account because they
reduce the amount of goods purchased
‰    
It is a deduction allowed by manufacturer to the
wholesaler or the retailer on the gross value or list
price of goods to enable the buyer to sell the goods
further (at list price) and yet make a profit for him.
Trade discount is not recorded in any accounts it is
deducted in the invoice itself from the gross value
of goods. The entry in the journal will be recorded
with the net value of goods left after deducting
trade discount. It may be noted that cash discount
is calculated on net value of goods left after
deducting trade discount.
‰  
›oods Account can be classified into following
categories.
‡   !|  The account is meant for
recording all purchases of goods, ›oods ³come
in´ on purchasing of goods and, therefore the
purchase Account is debited on purchase of
goods.
‡ Ä|  The account is meant for
recording of selling of goods. The goods ³go out´
on selling of goods, and therefore, on sale of
goods, the Sales Account is credited.
‡   !   |   The account is
meant for recording return of goods purchased.
The goods ³go out´ on returning of goods to the
suppliers and, therefore, the account should be
credited on returning goods purchased.

‡ Ä   |  : The account is meant

for recording return of goods sold, by the
customers. The goods ³come in´ and, therefore,
the Sales Returns Accounts should be debited
on returns of goods.

%

‡ In case of running business, the assets and
liabilities appearing in the previous year¶s
balance sheet will have to be brought forwards to
the current year. This is done by means of a
journal entry which is termed as ³opening entry´.
All assets accounts are debited while all liabilities
accounts are credited. The excess of assets over
liabilities is the proprietor¶s capital and credited to
his capital account.
 xample of Opening ntries
‡ Pass the opening entry on January 1, 1998 on
the basis of the following information taken from
the business of Mr. ABC:
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