After the transactions have been carried out and corresponding vouchers have been issued, the transaction needs to be entered into a book of accounts. Accounting journals are the documents in which transactions are first recorded in chronological order. An accounting journal is more like a diary for business transactions. Therefore it is called the book of original entry. We have a separate journal/ daybook for each type of transaction. For example, we may have a sales daybook for sales of one type of goods and a purchase day for any specific type of material, which is purchased regularly.

Maintaining Journal/ daybooks

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Advantages of Using Accounting Journal

The journal is used for the following benefits.

• ·         Accounting journal is a permanent record of all business transactions.
• ·         Recording transactions in a journal provides an opportunity to accurately establish the nature of the transaction. For example, if a business buys a computer for internal use instead of selling it in an ordinary course, it shall be recorded in General Journal instead of Purchase Journal. It is easier to confirm accuracy, at the time of entering a transaction into a Journal/ daybook.
• ·         The use of Journals/ daybooks helps determine which accounts need to be credited and which to be debited accordingly. Without the journal, the accountant will be forced to enter debit and credit into the individual account, this may result in omission or duplication of transactions. Although, recording transactions in a journal/ daybook does not guarantee that there will be no errors, however, this drastically reduces the chances of errors.
• ·         Journals/ day books are maintained in a way that businesses can record as much information as they need for a particular transaction. This helps to avoid cluttering in the ledger while posting transactions.
• ·         The recording of transactions in sequential order makes transactions available and traceable, as and when required.
• ·         Complete detail of each transaction is available.
• ·     At the time of entering transactions, remarks called narrations are entered in the journal. Narrations provide explanations for each transaction.
• ·         Timely recording of transactions reduces the chances of error.

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Types of Books of Original Entry

Journals/ day books are further divided into various types according to the nature of the transactions. Each particular type (e.g. Sales or purchase) of the transaction is entered into a different type of Journal/ daybook. The most common type of journal used in businesses are as follows:

 (i) Purchase Journal/ daybook: It records all transactions related to goods purchased on credit.

(ii) Sales Journal/ daybook: It records all transactions related to goods sold on credit.

(iii) Purchase Return Journal/ daybook: It contains the record of return of goods to suppliers.

(iv) Sale Return Journal/ daybook: It records the return of goods by the customers.

(v) Cash Journal/ daybook: It records all the transactions which are carried out in cash or by cheques.

(viii) General Journal: Transactions that are not listed in any of the above books are listed in the General Journal.

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