What is General Journal?
The general journal is the journal of the company in which initial record keeping of all the transaction is done which are not recorded in any of the specialty journal maintained by the company like purchase journal, sales journal, Cash journal, etc.
Whenever an event occurs, or a transaction happens, it records in a journal. Journal can be of two types – specialty journal and a general journal.
A specialty journal records special events or transactions that are related to the particular journal itself. There are mainly four kinds of specialty journals – Sales journal, Cash receipts journal, Purchases journal, and Cash disbursements journal. The company can have more specialty journals depending on its needs and type of transactions, but the above four mentioned journals contain the bulk of accounting activities.
All other transactions not entered in a specialty journal account for in a General Journal. It can have the following types of transactions:
- Accounts receivables
- Accounts payable
- Equipment
- Accumulated depreciation
- Expenses
- Interest income and expenses etc.
General Journal Accounting
Double entry bookkeeping is the most common method of general journal accounting. Every business transaction is done by an exchange between two accounts. There are two equal and opposite accounts for all the transactions, namely credit and debits. Hence, when a transaction records in a journal, it debits one account and credits the other.
For example, A company purchases $5000 of inventory using the cash. An entry in the journal would be made whereby the cash account is decreased by $ 5000, and the inventory account is increased by $ 5000.

4.5 (241 ratings) 1 Online Courses | 3+ Hours | Verifiable Certificate of Completion | Lifetime Access
General Journal Format
It provides the chronological order of all non-specialized activities. It consists of 4 or 5 columns:
- Date of transaction
- Short description/memo
- Debit amount
- Credit amount
- A reference number (referencing to journal ledger as an easy indicator)
General Journal Examples
In the above table general journal examples, we can see each transaction records as two lines- one debit and one credit account.
Flow Process
Let us look at the flow process of entries before and after it is recorded in the general journal. Before entry is made, the maker has to decide:
- the accounts which will be affected by the transaction
- which account to debit and which account to credit
After making entries in the general journal in accounting, all the transactions are summarized and posted in the ledger.
A ledger is an account of final entry, which is a master account that summarizes the transactions in the Company. It has individual accounts that record assets, liabilities, equity, revenue, expenses, gains, and losses.
Some examples of accounts in the ledger:
- Accounts receivable (an asset account)
- Accounts payable (a liability account)
- retained earnings (an equity account)
- product sales (a revenue account)
- cost of goods sold (an expense account)
To summarise: every accounting transaction is stored in a journal that acts as an intermediary repository of information, which is then recorded in a general journal ledger. The ledger, in turn, is used to aggregate this information into the financial statements of a business, which are called an initial trial balance.
Uses
We discussed the use of journals in recording the Company’s transactions, and it’s used in general journal accounting. A journal can also be used in investing. An individual trader or a professional fund manager can form a journal where he records the details of the trades made during the day. These records can be used for taxation, audit, and evaluation purposes.
These records can help traders to evaluate their trading and investing performance over some time and provide them information about their failures and successes. The traders can learn from the past and improve in future trades.
Such a journal generally consists of profitable and unprofitable trades, watchlists, pre and post-market conditions and analysis and notes on each trade being bought or sold.
Technological Advances
While these have been in practice since the time record-keeping is done, however, with advances in technology and nearly all companies and even small businesses are using in general journal accounting software. Simple data entry of these transactions in these software logs them in the journal and ledger accounts. Many of these softwares provide simple drop downs to record the transactions, thus making complex and tedious tasks very easy.
Conclusion
General journal is an initial record-keeping that records all the transactions except for the ones which are recorded in a specialty journal like cash journal, purchase journal, etc. It states the date of the transaction, description, credit, and debit information in a double bookkeeping system. These journal entries are then used to form a general ledger, and the information is transferred into respective accounts of the general ledger. The ledgers are then used to make trial balances and finally the financial statements. However, these journals were more visible in the manual record-keeping days. With the advent of technology, the task of record keeping has been made easy with all the information being stored in a single repository with no specialty journals in use.
General Journal Video
Recommended Articles
This article has been a guide to what is General Journal in Accounting? Here we discuss general journal examples, format, entries along with its uses. You may learn more about Accounting from the following articles –