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Journal Entries

Journal Entries

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Published by Gaurav
brief idea of Journal Entries
brief idea of Journal Entries

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Published by: Gaurav on Nov 08, 2009
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04/07/2013

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Journal Entries
After a transaction occurs and a source document is generated, the transaction isanalyzed and entries are made in the
general journal
. A journal is a chronologicallisting of the firm's transactions, including the amounts, accounts that are affected, andin which direction the accounts are affected. A
 journal entry
takes the following format:
Format of a General Journal Entry
Date Accounts Debit Credit
mm/ddaccount to be debitedxxxx.xxaccount to be credited xxxx.xx
In addition to this information, a journal entry may include a short notation that describesthe transaction. There also may be a column for a reference number so that thetransaction can be tracked through the accounting system.The above format shows the journal entry for a single transaction. Additionaltransactions would be recorded in the same format directly below the first one, resultingin a time-ordered record. The journal format provides the benefit that all of thetransactions are listed in chronological order, and all parts of each transaction are listedtogether.Because the journal is where the information from the source document first enters theaccounting system, it is known as the
book of original entry 
.
Compound Journal Entries
The format shown above has a single entry for the debit and a single entry for the credit.This type of entry is known as a
simple journal entry
. Sometimes, more than twoaccounts are affected by a transaction so more than two lines are required. Such a journal entry is know as a
compound journal entry
and takes the following format:
Format of a Compound General Journal Entry
Date Accounts Debit Credit
mm/ddaccount to be debitedxxxx.xxaccount to be credited xxxx.xx
 
account to be credited xxxx.xx
For example, if an expense is incurred in which part of the expense is paid with cashand the remainder placed in accounts payable, then two lines would be used for the

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