JOURNAL & LEDGER

JOURNAL

INTRODUCTIONS

When the business transactions take place, the first step is to record the same in the books of original entry or subsidiary books or books of prime or journal. Thus journal is a simple book of accounts in which all the business transactions are originally recorded in chronological order and from which they are posted to the ledger accounts at any convenient time. Journalising refers to the act of recording each transaction in the journal and the form in which it is recorded, is known as a journal entry.

The specimen journal is as follows:

Date	Particulars	L.F.	Debit Rs.	Credit Rs.
1	2	3	4	5
			-	-

The journal has five columns, viz. (1) Date; (2) Particulars; (3) Ledger Folio; (4) Amount (Debit); and (5) Amount (Credit) and a brief explanation of the transaction by way of narration is given after passing the journal entry.

(1) Date: In each page of the journal at the top of the date column, the year iswritten and in the next line, month and date of the first entry are written. Thus, in this column, the date on which the transaction takes place is alone written.

(2) Particulars: In this column, the details regarding account titles anddescription are recorded. 

The name of the account to be debited is entered first at the extreme left of the particulars column next to the date and the abbreviation ‘Dr.’ is written at the right extreme of the same column in the same line. 

The name of the account to be credited is entered in the next line preceded by the word “To” leaving a few spaces away from the extreme left of the particulars column. 

In the next line immediately to the account credited, a short about the transaction is given which is known as “Narration”. 

“Narration” is a short details about the transaction on which journal entry has been passed. It usually starts with the word “Being” which means what it is and is written within parentheses.

(3)    Ledger Folio: This column is meant to record the reference of the main book, i.e., ledger and is not filled in when the transactions are recorded in the journal.

(4)       Amount (Debit): The amount to be debited along with its unit ofmeasurement at the top of this column on each page is written against the account debited.

(5)      Amount (Credit): The amount to be credited along with its unit ofmeasurement at the top of this column on each page is written against the account credited.

LEDGER

Ledger is a main book of account in which various accounts of personal, real and nominal nature, are opened and maintained. 

A ledger account may be defined as a summary statement of all the transactions relating to a person, asset, expense, or income or gain or loss which have taken place during a specified period and shows their net effect ultimately. 

When transactions take place, they are first entered in the journal and subsequently posted to the concerned accounts in the ledger...

3.4.1 Ruling of ledger account

The ruling of a ledger account is as follows:

TYPE – 1

                TYPE – 2

     

          Ledger Account Type 1 is followed in almost all the business concerns, whereas Type 2 is followed only in banking institutions to save space, time and clerical work involved.