General Journal Bookkeeping Concepts

General Journal
A general journal is simply a record book containing transactions listed in chronological order. These transactions are “general” transactions which don’t fit the requirement to be recorded into the specialist journals. But at this stage of the example, we will simply record all transactions into the general journal, just to keep it simple. The transactions recorded into the general journal are set out in the format below. Date 200X DD/MM Details “Accounts to be debited” ”Account to be credited” ”Brief explanation of transaction” Debit XX XX Credit

In most manual, and some computerised accounting systems, a transaction is first recorded in a journal (either general journal or the special journals) before the effects of the transactions are entered into the individual accounts of the general ledger. The benefit of this 2 stage recording method is to improve control. Throughout my explanation of major accounting & bookkeeping concepts, I will be using examples to help illustrate my point. All examples will be based on the fictitious but realistic furniture retail business called FURNITURE CO. owned and run by DAVID S, a sole proprietor. Below is a list of typical transactions a business would make. Due to the double entry bookkeeping concepts all transactions affect at least 2 accounts. In this example all transactions will affect the amount of “cash” in the business. Transaction no. 1 2 3 4 5 6 7 Date 5-Mar 7-Mar 9-Mar 13-Mar 20-Mar 20-Mar 31-Mar Details The owner David S contributed $20 000 capital Cash register purchased $1 000 Received payment from a debtor $1 800 Delivery van purchased $7 000 Payment to a creditor $800 David S withdraws $700 cash from the business Furniture sales in cash $1 000

The list of transactions above are recorded into the general journal below. Please note that each entry into the general journal follows the same format as shown above.
Date 2008 Details Debit Credit

5-Mar

Cash at bank Owners Equity - David S To record the owner's contribution of cash capital to Furniture Co. Office Equipment Cash at bank To record a cash register purchased with cash Cash at bank Accounts receivable To record a cash payment received from a debtor

20 000 20 000

7-Mar

1 000 1 000

9-Mar

1 800 1 800

13-Mar Motor vehicles
Cash at bank To record a purchase of a delivery van with cash

7 000 7 000

20-Mar Accounts payable
Cash at bank To record a payment of cash to a creditor

800 800

20-Mar Drawings
Cash at bank To record a withdrawal of cash from Furniture Co. by the owner

700 700

31-Mar Cash at bank
Furniture Inventory To record sale of furniture for cash

1 000 1 000

To summarize, recording transactions into the general journal is only one step of the accounting process. My aim is to give you a small sample of the processes involved and how important these bookkeeping concepts are to the overall process of the accounting system. If you would like a detailed step by step guide as well as explanations on each transaction please visit my site by clicking HERE.

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.