Introduction to Journal & Ledger

Financial and Management Accounting
Unit I of Introduction of Financial Accounting - Part B
(Objectives, Format of Journal & Ledger)

1. 19mst15 – Financial and management accounting m. Nandhakumar Assistant professor Erode sengunthar engineering college (autonomous) Perundurai , erode

2. Meaning of journal The word “Journal” has been derived from the French Word “JOUR” meaning of daily records The journal records all daily transactions of a business in the order in which they occur. Thus, journal is a book of original entry / books of prime entry.

3. Definition of journal According to Eric. L. Kohler., “The journal is a book of original entry in which are recorded transactions not provided for in specialized journals.”

4. Meaning of ledger When the transactions are recorded form the primary books of accounts on permanent basis under double entry system in a summarized and classified form in different accounts and the same is posted in separate pages, it is called Ledger.

5. Definition of ledger According to L.C. cropper, “The book which contains a classified and permanent record of all the transactions of a business is called subsidiary boos.

6. Difference between journal and ledger Basis of difference Nature of book Basis of preparation Stage of recording Object Balancing Narration Processing of recording entries Preparation of final accounts journal It’s primary or prime entry. Its prepared on the basis of source documents of transactions. Recording in the journal in the first stage. Its prepared to record all transactions in order. Journal isn’t balanced. Narration is written for each entry. The process of recording in journal is called “Journalizing”. Directly doesn’t preparing of final A/c ledger Its book of final or secondary entry. Its prepared on the basis of journal Recording in the ledger is the second stage. Its prepared to know the net effect of various transactions. All ledger accounts (except nominal account) are balanced in the ledger. No narration is given. The process of recording in the ledger is called “Posting”. Basis for the preparation of final A/c.

7. Format of journal Date Particulars L.F Dr. Cr. Date The transaction was entered is recorded here. Particulars Transaction recorded L.F – Ledger Folio Dr. - Debit Cr. - Credit

8. Examples of journal entries Goods purchased for Rs.5,000 Salary paid Rs.3,200 Amount paid to Mohan Rs.10,000 Date Particulars L.F Dr. Cr. 15.11.2020 Purchase A/c Dr To Cash A/c (Being goods purchased for cash) 5,000 5,000 17.11.2020 Salary A/c Dr To cash A/c (Being salaries paid) 3,200 3,200 18.11.2020 Mohan A/c Dr To cash A/c (Being amount paid to mohan ) 10,000 10,000

9. Examples of journal entries Sold goods to Rajesh Rs. 2,000 Old machinery sold Rs.3,200 Amount received form Mohan Rs.10,000 Date Particulars L.F Dr. Cr. 15.11.2020 Rajesh A/c Dr To Sales A/c (Being goods purchased for cash) 2,000 2,000 17.11.2020 Cash A/c Dr To Sales A/c (Being salaries paid) 3,200 3,200 18.11.2020 Mohan A/c Dr To cash A/c (Being amount paid to Mohan) 10,000 10,000

10. Q & A