JOURNAL

• JOURNAL
  FOR PLUS ONE ACCOUNT
• BBA/MBA/CA AND CS FOUNDATION

   MEANING

·         JOURNAL IS A BOOK OF ORIGINAL ENTRY IN WHICH ALL THE BUSINESS TRANSACTION ARE RECORDED SYSTEMATICALLY.SUCH BOOKS ARE ALSO KNOWN AS SUBSIDIARY BOOKS.IT REFLECT THE RELATION THAT EXIST BETWEEN TWO ASPECTS THAT IS DEBIT AND CREDIT

·         M.J KEELER HAS DEFINED THE JOURNAL AS A CHRONOLOGICAL RECORD OF FINANCIAL TRANSACTIONS OF A BUSINESS.

   FEATURES

1.       BOOK OF ORIGINAL ENTRY

2.       KNOWN AS DAY BOOK

3.       IT IS ONLY A SUBSIDIARY BOOK , SUBORDINATE TO THE LEDGER ( PRINCIPAL BOOK OF ACCOUNT)

4.       RECORD THE TRANSACTION ACCORDING TO THE ORDER OF OCCURRENCE

5.       A COMPLETE PICTURE OF EACH BUSINESS TRANSACTION

6.       MAINTAIN ARITHMETICAL ACCURACY OF THE BOOKS OF ACCOUNTS

7.       EVERY ENTRY IS FOLLOWED BY THE NARRATION

   NEED FOR JOURNAL

1.       FOR CONVENIENT RECORDING OF THE TRANSACTIONS

2.       MAINTAINING AND PRESERVING THE IDENTITY OF THE JOURNAL

3.       MAINTAINING PERMANENT RECORD OF INFORMATION

4.       NATURE OF THE TRANSACTION WITH THE HELP OF NARRATION

   FUNCTIONS OF JOURNAL

1.       MAINTAINING AND PRESERVING THE IDENTITY OF THE TRANSACTIONS

2.       TO ANALYSE THE DR AND CREDIT ASPECT OF THE TRANSACTIONS AND POSTING THEM INTO LEDGER

3.       WRITING THE TRANSACTION DATE WISE

   FORMAT OF JOURNAL

   ADVANTAGES

1.       TRANSACTIONS RECORDED DATE WISE WITH EXPLANATION

2.       EASY TO CLASSIFY

3.       ENSURE THAT DOUBLE ENTRY RULES HAVE BEEN FOLLOWED

4.       RELIANCE EVIDENCE

5.       DETECTION OF ARITHMETICAL ERRORS

6.       PROVIDES PRIMARY SOURCE OF DATA

   LIMITATIONS

1.       BULKY AND VOLUMINOUS

2.       DAILY CASH BALANCE NOT POSSIBLE

3.       DIFFICULT TO LOCATE A TRANSACTION

4.       TIME CONSUMING

   STEPS IN JOURNALISING

1.       IDENTIFY THE ACCOUNT INVOLVED

2.       NATURE OF THE ACCOUNT

3.       APPLY THE RULE

4.       FIND OUT WHICH TO BE DEBITED AND WHICH IS TO BE CREDITED

5.       FILL THE DATE COLUMN

6.       THE NAME OF THE ACCOUNT DEBITED HAS TO BE WRITTEN IN FIRST LINE WITH ABBREVIATION DR.

7.       IN THE NEXT LINE THE NAME OF ACCOUNT CREDITED PRECEDED BY TO

8.       A BRIEF EXPLANATION

9.       DRAW A LINE TO SEPARATE ONE JOURNAL ENTRY FROM THE OTHER

   RULES

1.       DUAL ASPECT IN ACCOUNTING MEANS THAT EVERY ACCOUNTING TRANSACTIONS WOULD BE EXPRESSED BY A DEBIT AMOUNT AND AN EQUAL AND AFFECTED CREDIT AMOUNT

2.       DEBIT = CREDIT

3.       ASSET =LIABILITIES + CAPITAL

4.       A =L+P

5.       A-L= CAPITAL

   TRADITIONAL APPROACH

1.       PERSONAL ACCOUNT: NATURAL PERSONAL ACCOUNT,ARTIFICIAL PERSONAL ACCOUNT AND REPRESENTATIVE PERSONAL ACCOUNT

2.       REAL ACCOUNT : TANGIBLE ACCOUNT AND INTANGIBLE ACCOUNT

3.       NOMINAL ACCOUNT : EXPENSES OR LOSSES,PROFIT OR GAINS

   PERSONAL ACCOUNT

   ACCOUNT OF THE PERSON WITH WHICH THE BUSINESS DEALS

1. NATURAL PERSONAL ACCOUNT:- WHO ARE CREATED BY NATURE LIKE RAM A/C,SHAM A/C.GEETA A/C
2. ARTIFICIAL PERSONAL ACCOUNT : ACCOUNT RELATED WITH BUSINESS ENTITIES SUCH AS SOLE PROPRIETORSHIP,PARTNERSHIP.COMPANY,COOPERATIVE SOCIETY ETC
3. REPRESENTATIVE PERSONAL ACCOUNT:-THESE ARE ACCOUNTS WHICH REPRESENT A CERTAIN PERSON OR

GROUP OF PERSONS. IN BOOKS, THE NAMES OF THE PARTIES WILL APPEAR. SINCE THESE ACCOUNTS ARE MANY

   IN NUMBER BUT ARE OF THE SAME NATURE, THEY ARE ADDED AND PUT UNDER A COMMON TITLE. FOR EXAMPLE,SALARY IS OUTSTANDING TOWARDS 15 EMPLOYEES, THE AMOUNT MAY BE SHOWN AGAINST ONE NAME ‘SALARY OUTSTANDING’ REPRESENTING ALL THE 15 EMPLOYEES. INTEREST OUTSTANDING, CAPITAL ACCOUNT, RENT RECEIVABLE, PREPAID EXPENSES AND INCOME RECEIVED IN ADVANCE ARE OTHER SUCH EXAMPLES

   RULES FOR PERSONAL ACCOUNT

1.       DEBIT THE RECEIVER

2.       CREDIT THE GIVER

   CASH IS PAID TO MONA

1.       IN THIS TRANSACTION PERSONAL ACCOUNT IS APPEARING

2.       SHE IS RECIVEING THE CASH SO MONA WILL BE DEBITED

• CASH RECEIVED FROM NEERAJ
• IN THIS TRANSACTION NEERAJ IS PERSONAL ACCOUNT

   HE IS GIVING THE CASH SO NEERAJ ACCOUNT WILL BE CREDITED

   REAL ACCOUNT

   REAL ACCOUNT  TRANSACTION RELATING TO PROPERTIES AND ASSETS.

1.       TANGIBLE REAL ACCOUNT:- RELATED WITH THOSE THINGS WHICH CAN BE SEEN/TOUCHED,PURCHASED AND SOLS LIKE MACHINERY,CASH ,FURNITURE ETC

2.       INTANGIBLE REAL ACCOUNT:- RELATE WITH THOSE THINGS WHICH CAN NOT BE TOUCHED OR SEEN LIKE GOODWILL,PATENTS AND TRADEMARK ETC

   RULES

1.        DEBIT WHAT COMES IN BUSINESS

2.       CREDIT WHAT GOES OUT

   MACHINERY IS PURCHASED ON CASH FOR 45,000

1.       TWO ASPECTS

2.       MACHINERY WILL BE DEBITED AS IT IS COMING IN THE BUSINESS

3.       CASH: WILL BE CREDITED AS IT IS GOING OUT OF THE BUSINESS

   NOMINAL ACCOUNTS

   REPRESENT ALL EXPENSES,LOSSES,PROFITS AND GAINS WHICH ARE INCURRED OR EARNED DURING THE COURS OF BUSINESS EXAMPLE : SALARY,RENT,INTEREST,COMMISSION,LOSS BY THEFT,PROFIT AND GAINS

   RULES OF  NOMINAL ACCOUNT

1.       DR ALL EXPENSES AND LOSSES

2.       CREDIT ALL INCOME.PROFIT AND GAINS

   SALARY PAID: HERE SALARY IS AN EXPENSE SO IT WILL BE DEBITED

   RECEIVED COMMISSION HERE COMMISSION IS INCOME WILL BE CREDITED

   SUMMARY OF RULES

1.       PERSONAL ACCOUNT : DR THE RECEIVER AND CR THE GIVER

2.       REAL ACCOUNT : DR  WHAT COMES IN AND CREDIT WHAT GOES OUT

3.       NOMINAL ACCOUNT : DR ALL EXPENSES ,LOSSES AND CREDIT ALL INCOME AND GAINS

   MODERN APPROACH

   BASED ON ACCOUNTING EQUATION

   A=L + CAPITAL

   RULES:

1. INCREASE IN ASSETS DEBITED AND DECREASE IN ASSETS ARE TO BE CREDITED
2. INCREASE IN LIABILITY ARE CREDITED AND DECREASE ARE DEBITED
3. INCREASE IN OWNER’S EQUITY ACCOUNTS ARE CREDITED AND DECREASE ARE DEBITED
4. INCREASE IN EXPENSES/LOSSES ACCOUNT ARE DEBITED
5. INCREASE IN REVENUE AND PROFITS ARE CREDITED

EXAMPLE

   SHAM STARTED BUSINESS WITH CASH 50,000

1.       HERE TWO ASPECTS CASH AND CAPITAL

2.       CASH REAL ACCOUNT SO RULE WILL BE APPLIED : DR WHAT COMES IN CREDIT WHAT GOES OUT

3.       CAPITAL IS PERSONAL ACCOUNT

4.       CASH WILL BE DEBITED AND CAPITAL WILL BE CREDITED

   PAID SALARY

1.       SALARY –NOMINAL ACCOUNT RULE DEBIT ALL EXPENSES AND CREDIT ALL PROFITS AND GAINS

2.       SALARY IS EXPENSE AND DEBITED AND CASH IS REAL ACCOUNT IS GOING OUT OF THE BUSINESS WILL BE CREDITED

   PAID TO MOHAN 9000

   MOHAN IS PERSONAL ACCOUNT AND RULE DR THE RECEIVER AND CREDIT THE GIVER HERE MOHAN IS RECEIVING THE CASH SO MOHAN WILL BE DEBITED AND CASH IS REAL ACCOUNT AND WILL BE CREDITED

   PURCHASED FURNITURE

1.       FURNITURE IS COMING IN THE BUSINESS SO WILL BE DEBITED

2.       CASH  WILL BE GOING OUT OF THE BUSINESS SO CREDITED