Page 67 - DMGT104_FINANCIAL_ACCOUNTING

Unit 5: Preparation of Journal, Ledger and Balancing

5.1 Books of Original Record Notes

The accounting process includes the identification of financial transactions, recording of them
and summarizing. Thus, after identifying the financial nature items the first step of accounting
process is the recording the transactions. The books in which these transactions are recorded
first time are called the books of original entries or records. These books of original records are
divided into following three:

Memorandum Book

It is also called the waste book. When a transaction takes place in the business it is first roughly
written in the memorandum book chronologically for the memory only. Then after some time,
these transactions are recorded in the journal and subsidiary book. After recording these
transactions, this book is destroyed. Therefore, it is called waste book.
Journal

‘Journal’ word is derived from French word ‘Jour’ which means a day book. Journal is a primary
book of original entries for accounting data. In the Journal the business transactions are recorded
chronologically that is called Journalising. Thus the accounting data are recorded first time in
this book. In the words of Carter, “A Journal, as originally used, is a book of primary entry in
which transactions are copied in the order of date from a memorandum or waste book. The
entries are then copied and classified into debts and credits, so far to facilitate their being
correctly posted afterwards in the ledger”. The proforma of a Journal is given here under:

Pro forma of a Journal
Date Particulars L.F. Amount Dr. Amount Cr.
( ) ( )

As per the above pro forma of Journal the first column is kept for date means date of transaction
is recorded, second wide column for particulars of business transactions in which the related
accounts are showed along with their narrations. Third column is for ledger folio number where
the journal entry is posted in ledger. The fourth and fifth columns are kept for debit amount and
credit amount.

Did u know? What is meant by the journal entry?
It is an entry systematically recorded to the tune of golden rules of accounting in the
journal book is known as journal entries.

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