Chapter 4

Journalizing Transactions

Accounting cycle involves the following stages:

1. Recording of transactions 

2. Classifying the transactions 

3. Summarising the transactions 

4. Interpreting the results

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 JOURNAL

A Journal is a book containing a chronological record of

transactions.

A pro forma of journal is given below:

Date Particulars L.F. Debit (`) Credit (`)

(1) (2) (3) (4) (5)

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 RULES OF DEBIT AND CREDIT

A. Personal accounts can be classified into three categories.

1. Natural Personal Accounts 

2. Artificial Personal Accounts 
3. Representative Personal Accounts

The rule is:

• DEBIT THE RECEIVER
• CREDIT THE GIVER

(Contd…)

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B. Real accounts
1. Tangible real accounts
2. Intangible real accounts

The rule is:

• DEBIT WHAT COMES IN
• CREDIT WHAT GOES OUT

C. Nominal accounts include accounts of all expenses, losses,

incomes and gains.

The rule is:

• DEBIT ALL EXPENSES AND LOSSES
• CREDIT ALL GAINS AND INCOMES

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 Sub-Division of Journal

Need to Sub-divide Journal

(i) Convenience

(ii) Division of labour

(iii) Classified information

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 SUB-DIVISION OF JOURNAL

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2. Special Journal

The term ‘Special Journal’ means a Journal which is meant for a special purpose. The following are the various

types of Special Journals.

(i) Cash Journal

(ii) Goods Journal

(a) Purchases Journal

(b) Sales Journal

(c) Purchases Returns Journal

(d) Sales Returns Journal

(iii) Bills Journal

(a) Bills Receivable Journal

(b) Bills Payable Journal

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1. General Journal

It is also known as Journal Proper. It is meant for

recording all such transactions for which no special
journal has been kept. Examples of such transactions
are as follows:

(i) Opening entries (ii) Closing entries

(iii) Adjustment entries (iv) Transfer entries

(v) Rectification entries (vi) Purchase of fixed assets

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 CASH JOURNAL

The cash book can be of any of the following types:

(i) Simple Cash Book

(ii) Two-Columnar Cash Book

(iii) Three-Columnar Cash Book

(iv) Multi-Columnar Cash Book

(v) Cash Receipts Book

(vi) Cash Payments Book

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