Journal Class 11 Notes Accountancy

The books in which a transaction is recorded for the first time from a source document are called ‘Books of Original Entry’.

A journal is one of the basic books originally recorded in a chronological (day-to-day) order according to the principles of the double entry system.

The journal is subdivided into several sub-journals known as Special Purpose Subsidiary Books or Books of Original Entry. These are:

• Cash Book
• Purchases Book
• Sales Book
• Purchases Return Book
• Sales Return Book
• Bills Receivable Book
• Bills Payable Book
• Journal Proper

Features or Characteristics of a Journal

1. Journal is a book in which the transactions are recorded first of all, as and when they take place.
2. A journal is only a book of primary (original) entries.
3. A journal is a daily accounting record, i.e., each day’s transactions are recorded in the journal on the same day.
4. In the journal, transactions are recorded in chronological order, i.e., in a date-wise order.
5. It maintains the identity of each transaction and provides a complete picture of the same in one country.
6. A journal records both the debit and credit aspects of a transaction according to the double-entry system of bookkeeping.
7. Each entry in the journal is followed by a brief explanation of the transaction which is called ‘Narration’.
8. A single journal entry is capable of recording more than one transaction involving more than two accounts. Such an entry is called a compound entry.

Functions of a Journal

• To keep a chronological (i.e., data-wise) record of all transactions.
• To analyze each transaction into debit and credit aspects by using a double entry system of book-keeping.
• To provide a basis for posting into the ledger.
• To maintain the identity of each transaction by keeping a complete record of each transaction in one place permanently.

Advantages of Journal

• As transactions in a journal are entered as and when they take place, the possibility of omission of a transaction in the books of accounts is minimized.
• As transactions in the journal are recorded in chronological order, it is very easy to locate a particular transaction when required.
• By analyzing each transaction into debit and credit aspects, the journal facilitates the posting into the ledger.
• Each entry in the journal carries narration which gives a brief explanation of the transaction.

Limitations of Journal

• When the number of transactions is large, it is not possible to record all the transactions in a journal.
• Many transactions are repetitive in nature and if all transactions are recorded in the journal, it will involve debiting and crediting the same accounts time and again.
• To ascertain cash balance every day, cash transactions are usually recorded in a separate book called ‘Cash Book’.
• The journal does not provide the required information on a prompt basis.

Format of Journal

1. Date: In the first column, the date of the transaction is entered. The year and the month are written only once, till they change.
2. Particulars: Each transaction affects two accounts out of which one account is debited and the other account is credited.
   Narration: After each entry, a brief explanation of the transaction together with necessary details is given.
3. Ledger Folio or L.F.: All the entries from the journal are later posted into the ledger accounts. The page number or folio number of the ledger account where the posting has been made from the journal is recorded in the L.F. column of the journal.
4. Amount Dr.: In the fourth column, the amount of the account being debited is written.
5. Amount Cr.: In the fifth column, the amount of the account being credited is written.

Steps in Journalizing

• Before recording a journal entry, it is essential to analyze a transaction to determine the two accounts that are affected.
• It is not necessary to use the word ‘Account’ or A/c after the personal accounts.
• After every journal entry, a line should be drawn in particular columns, so that each entry is separated from the preceding one.
• At the end of each page, both the Dr. and Cr. columns are totaled up just in front of each other.

Ledger Class 11 Notes Accountancy

Rules of Journalizing

Three accounts need to be kept in mind while making a journal entry. These are as follows:

1) Personal Accounts

Personal accounts are the accounts of natural, artificial, and representative accounts. Its rule is “Debit the receiver, Credit the giver”.

For example: If we receive Rs. 5,000 from Chetan, the entry will be:

Cash A/c Dr. 5,000
To Chetan 5,000
(Cash received from Chetan)

2) Real Accounts

This account includes assets like machines. Its rule is “Debit what comes in, Credit what goes out”.

For example: If machinery is purchased for Rs. 10,000, the entry will be:

Machinery A/c Dr. 10,000
To Cash A/c 10,000
(Machinery purchased for cash)

3) Nominal Accounts

This account includes expenses and income accounts like salary accounts, rent received accounts, etc. Its rule is “Debit the receiver, Credit the giver”.

These are the main notes of the Journal chapter. If you have any doubts related to this chapter, you can ask those doubts in the comments section. I will try to answer your doubts as soon as possible.