Books of Original Entry

  • In the preceding pages, you learnt about debits and credits and observed how transactions affect accounts.
  • This process of analysing transactions and recording their effects directly in the accounts is helpful as a learning exercise.
  • However, real accounting systems do not record transactions directly in the accounts.
  • The book in which the transaction is recorded for the first time is called journal or book of original entry.
  • The source document, is required to record the transaction in the journal.
  • This practice provides a complete record of each transaction in one place and links the debits and credits for each transaction.
  • After the debits and credits for each transaction are entered in the journal, they are transferred to the individual accounts.
  • The process of recording transactions in journal is called journalising.
  • Once the journalising process is completed, the journal entry provides a complete and useful description of the event’s effect on the organisation.
  • The process of transferring journal entry to individual accounts is called posting.
  • This sequence causes the journal to be called the Book of Original Entry and the ledger account as the Principal Book of entry.
  • In this context, it should be noted that on account of the number and commonality of most transactions, the journal is subdivided into a number of books of original entry as follows:

(a) Journal Proper

(b) Cash book

(c) Other day books:

(i) Purchases (journal) book

(ii) Sales (journal) book

(iii) Purchase Returns (journal) book

(iv) Sale Returns (journal) book

(v) Bills Receivable (journal) book

(vi) Bills Payable (journal) book 

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