ACCOUNTING BOOKS - JOURNAL

AND LEDGER

Prep. By: Sir Reynald Krypton Guansing

 Differentiate the journal from the general ledger

Determine the normal balance of an account

L E A R N I N G
OBJECTIVES Prepare journal entries to record basic business
transaction

Determine balances of accounts using the t-account.

 JOURNAL & LEDGER
What is Journal?
The journal is a chronological record (day-by-day) of business transactions. It is called
the book of original entry because it is the accounting record in which financial
transactions are first recorded.

What is a general ledger?

The ledger refers to the accounting book in which the accounts and their related amounts
as recorded in the journal are posted to periodically. The ledger is also called the “book of
final entry” because all the balances in the ledger are used in the preparation of financial
statements. This is also referred to as the T-Account because the basic form of a ledger is
like the letter “T”.
 GENERAL JOURNAL & SPECIAL JOURNAL
Many businesses maintain several types of journals. The nature of the business operations
and the volume of transactions determine the type and number of journals needed. The
simplest type of journal is called the general journal. The process of recording a
transaction is called journalizing the transactions. This type of journal is unique among
journals because it may be used to record any type of business transactions. Recording all
transactions in the general journal is not cost effective and time consuming. To speed up
and simplify the recording process, most businesses make use of special journals. Each
special journal is designed to record a particular type of transaction efficiently
and quickly. Examples of special journals and their use are the following:

Cash Receipts Journal – is used to record all cash that had been received.
Cash Disbursements Journal – is used to record all transactions involving
cash payments.
Sales Journal (Sales on Account Journal) – is used to record all sales on
credit (on account)
Purchase Journal (Purchase on Account Journal) – is used to record all
purchases of inventory on credit (or on account)
 JOURNAL & LEDGER
The importance of using a journal
• The journal shows all information concerning a particular transaction.

• The journal provides a chronological record of all the financial events in the business
over time. If we want to know about a certain transactions of years or months back, we
can trace the said transactions as long as we have the date of the said transaction. The
entries in the journal are arranged by date that makes it necessary to locate a particular
event.
 JOURNAL & LEDGER
The use of General Ledger
A ledger is a means of accumulating in one place all the information about changes in
an asset, liability, equity, income, and expense accounts. A sample of the general
ledger is shown below:
 JOURNAL & LEDGER
The use of General Ledger
A general ledger is often called a T-Account because of its resemblance to the letter T.
A T-Account is a simplified form of general ledger. A sample of a T-account is shown
below:

Today, most organizations use accounting software to record transactions in general ledgers and to
journals, which has dramatically streamlined these basic record keeping activities. In fact, most
accounting software now maintains a central repository where companies can log both ledger and journal
entries simultaneously. These advances in technology make it easier and less tedious to record
transactions, and you don't need to maintain each book of accounts separately. The person entering data
in any module of your company's accounting or bookkeeping software may not even be aware of these
repositories. In many of these software applications, the data entry person need only click a drop-down
menu to enter a transaction in a ledger or journal.
 JOURNAL & LEDGER
Types of Major Accounts

“Chart Of Accounts”
 JOURNAL & LEDGER
Normal Balances of Accounts
DEBIT CREDIT

OWNER’S
ASSETS LIABILITIES
EQUITY
ASSETS LIABILITIES
OWNER’S PRACTICE
EQUITY
 ASSETS LIABILITIES
OWNER’S PRACTICE
EQUITY

Land 800,000
Cash 300,000
Notes Payable 500,000
ASSETS LIABILITIES
OWNER’S ASSIGNMENT
EQUITY
ASSETS LIABILITIES
OWNER’S PRACTICE
EQUITY