Till this we have learnt about debits and credits and observed how transactions affect accounts. The accounting system in practice does not record transactions directly in the accounts. The book in which the transaction is recorded for the first time is called journal or book of original entry.
The source document is required to record the transaction in the journal. This provides a complete record of each transaction in one place and links the debits and credits for each transaction. After the debits and credits for each transaction are entered in the journal, they are transferred to the individual accounts. The process of recording transactions in journal is called journalising. Once the journalising process is completed, the journal entry provides a complete description of the event's effect on the organisation.
The process of transferring journal entry to individual accounts is called posting. This sequence causes the journal to be called the Book of Original Entry and the ledger account as the Principal Book of entry. In this context, based on the number and nature of transactions, the journal is subdivided into a number of books of original entry.
Other day books:
Purchases (journal) book
Sales (Journal) book
Purchase Returns (Journal) Book
Sales Returns (Journal) Book
Bills Receivable (Journal books)
Bills Payable (Journal) book
In this chapter you will learn about the process of journalising and their posting into ledger.
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