Page 66 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting Rupesh Roshan Singh, Lovely Professional University

Notes Unit 5: Preparation of Journal, Ledger and Balancing

CONTENTS
Objectives
Introduction

5.1 Books of Original Record
5.1.1 Rules of Debiting and Crediting in Journal
5.1.2 Compound Journal Entry

5.1.3 Opening Journal Entry
5.2 Ledger
5.3 Balancing
5.4 Summary
5.5 Keywords

5.6 Review Questions
5.7 Further Readings

Objectives

After studying this unit, you will be able to:
 Prepare journal

 Construct journal entries between the accounts of two different categories
 Illustrate opening and compound journal entries
 Prepare ledger

 Make ledger posting
 Illustrate the balancing of accounts
Introduction

Journal is a book of accounts in which all day to day business transactions are recorded in a
chronological order i.e. in the order of their occurrence. Transactions when recorded in a Journal
are known as entries. It is the book in which transactions are recorded for the first time. Journal
is also known as ‘Book of Original Record’ or ‘Book of Primary Entry’.

The accounting process does not stop here. The transactions are recorded in number of books in
chronological order. Such recording of business transactions serves little purpose of accounting.
Items of same title in different books of accounts need to be brought at one place under one head
called an account. There are numerous account titles of items/persons or accounts. All the
accounts, if brought in one account book, will be more informative and useful. The account book
so maintained is called Ledger.

60 LOVELY PROFESSIONAL UNIVERSITY