- Learn Basic Accounting in Less than 1 Hour!
- Accounting Basics
- What are Accounting Principles
- Accounting Cycle
- Accrual Accounting Basis
- Cash Basis Accounting
- Matching Principle of Accounting
- Conservatism Principle of Accounting
- Cash Accounting
- What are Accounting Policies?
- Accounting Estimates
- Mark to Market Accounting
- Cash Accounting vs Accrual Accounting
- Operating Cycle
- Fiscal Year
- Fiscal Year vs Calendar Year | Top Differences | Examples |
- Financial Reporting
- Consolidated Financial Statement
- Audited Financial Statements
- Accounting Scandals
- IFRS vs US GAAP
- IFRS vs Indian GAAP
- Debit vs Credit in Accounting
- Double Entry Accounting System
- Journal in Accounting
- Ledger in Accounting
- Journal vs Ledger
- What is Trial Balance ? | Examples | Steps | Prepare | Errors
- Reconciliation of Books | Types, Best Practices | Useful Tips
- Petty Cash | Meaning | Template | Accounting | Example
- Debit Note | Debit Notes Accounting & its Top Characteristics
- Credit Note
- Debit Note vs Credit Note | Top 7 Differences (Infographics)
- Balance Sheet
- Balance Sheet
- Accounting Equation
- Assets vs Liabilities | Top 9 Differences (with Infographics)
- Trial Balance vs Balance Sheet | Top 10 Differences You Must Know!
- Balance Sheet vs Consolidated Balance Sheet
- Bank vs Company Balance Sheet
- Commitments and Contingencies
- Management Discussion & Analysis
- Revenue Reserve vs Capital Reserve | Top 7 Differences
- Revenue Reserve
- Capital Reserve
- Capital Receipts vs Revenue Receipts | Top 8 Differences
- Capital Lease vs Operating Lease | Top Differences You Must Know!
- Debt vs Equity Financing | Advantages | Disadvantages | Example
- Internal vs External Financing | Top 7 Differences (Infographics)
- Available for Sale for securities
- Held to Maturity to securities
- Cash and Cash Equivalents | Examples, List & Top Differences
- Cash Equivalents
- Restricted Cash
- 3 Types of Inventory | Raw Material | WIP | Finished Goods
- Current Assets
- FIFO vs LIFO
- First In First Out (FIFO)
- Last in First Out (LIFO)
- Non-Current Assets
- Accounts Receivables? | Definition, Accounting Examples
- Accounts Receivables Factoring
- Allowance for Doubtful Accounts
- Accrued Revenue
- Liquid Assets
- Marketable Securities on the Balance Sheet | Top Examples
- Prepaid Expenses
- Tangible vs Intangible Assets
- Net Tangible Assets | Calculate Net Tangible Assets Per Share
- Tangible Assets
- Salvage Value
- Residual Value
- Fixed Capital vs Working Capital | Top 8 Differences (Infographics)
- Impariment of Assets
- Negative Goodwill
- Accounts Payable | Days Payable Outstanding | Formula |
- Current Liabilities | List of Current Liabilities on Balance Sheet
- Accrued Liabilities
- Notes Payable
- Revolving Credit Facilities
- Bonds Payable Accounting
- Bad Debt Reserve Allowance
- Deferred Expenses
- Unearned Revenue (Sales)
- Deferred Revenue (Income)
- Current Portion of Long-Term Debt (CPLTD) | Balance Sheet
- Long-Term Debt in Balance Sheet
- Financial Liabilities | Definition, Types, Ratios, Examples
- Long-Term Liabilities
- Accounts Receivable vs Accounts Payable
- Minority Interest
- Accounting for Convertibles
- Accounting for Derivatives
- Financial Lease vs Operating Lease
- Off balance Sheet Financing
- Finance vs Lease
- Shareholders Equity
- Shareholders Equity Statement
- Negative Shareholders Equity
- Par Value of Stock
- Share Capital
- Outstanding Shares (Definition, Formula) | Stocks Outstanding
- Additional Paid-in Capital on Balance Sheet
- Retained Earnings (Formula, Examples) | How to Calculate?
- How to Calculate Net Worth of a Company | Formula | Top Examples
- Owners Equity
- Preferred Shares
- Weighted average Shares average outstanding
- Share Buyback
- Accelerated Share Repurchase
- Restricted Stocks Units (RSUs)
- Contingent Shares
- Stock Splits Share
- Treasury Stock Shares
- Dilutive Securities
- Anti Dilutive Securities
- Stock Dividend
- Cash Dividend
- Preferred Dividends
- Ex dividend date
- Date of Record of dividends
- Cost of preferred Stock
- Common Stock vs Preferred Stock | Top 8 Differences You Must Know
- Stocks Vs Shares
- Stock Options Vs RSU
- Shareholder Equity vs Net Worth | Top 5 Differences You Must Know!
- Stock vs Option
- Stock vs Mutual Funds
- Income Statement
- Income Statement | Top Examples | Template | Format | Analysis
- Cost of Goods Sold
- Direct Costs
- Indirect Costs
- Non Recurring Items
- EBIT vs EBITDA | Top Differences | Examples | Calculation
- Depreciation – Formula | Types | Most Comprehensive Guide
- EBITDA vs Operating Income
- Straight Line Depreciation Method
- Amortization of Intangible Assets
- Unrealized Gains (Losses)
- Non Cash Expense
- Share based compensation
- Restructuring Cost
- Extraordinary Items
- Double Taxation
- Net Operating Loss (NOL)
- Tax Shield
- Sundry Expenses
- Interest vs Dividend | Top 9 Differences (with Infographics)
- EBITDA vs Net Income
- EBIT vs Net Income
- EBIT vs Operating Income
- Accounting Profit vs Economic Profit
- Income Tax vs Payroll Tax
- Tax credits vs Tax deductions
- Gross Income vs Net Income
- Profit vs Revenue
- Revenue vs Earnings
- Revenue vs Income
- Profit vs Income
- Revenue vs Sales
- Capitalization vs Expensing
- Income Statement vs Balance Sheet | Top 5 Differences You Must Know!
- Statement of Comprehensive Income | Items | Colgate Example
- FOB Destination
- Explicit Cost
- Implicit Cost
- Direct cost vs Indirect Cost
- Nopat vs Net Income
- Marginal Costing vs Absorption Costing
- Cash Flow Statement
- Cash flow from Operations | Formula, Calculations & Examples
- Cash Flow from Investing Activities (Formula & Top Examples)
- Cash Flow From Financing Activities | Formula & Calculations
- Cash Flow Analysis
- Fund Flow Statement
- Direct vs Indirect Cash Flow Methods
- Cash flow vs Net Income | Key Differences & Top Examples
- Cash Flow vs Fund Flow | Top 8 Differences (with Infographics)
- Accounting Careers
- Accounting Interview Questions
- Financial Accounting Careers
- Top Accounting Firms
- Big Four Accounting Firms
- Forensic Accounting
- Cost Accounting
- Financial Accounting
- Accounting vs Engineering
- Finance vs Accounting
- Bookkeeping vs Accounting
- Accounting vs Auditing
- Bookkeepers vs Accountants
- Accounting vs Financial Management
- Cost Accounting vs Financial Accounting
- Cost Accounting vs Management Accounting
- Financial Accounting vs Management Accounting
- Accounting Firms in Australia
- Accounting Firms in Canada
- Top Accounting Firms in US
- Accounting Books
What is Journal in Accounting?
Journal in accounting is named as the book of original entry. It’s called book of original entry because if any financial transaction occurs, the accountant of a company would first record the transaction in the journal. That’s why journal in accounting is very important for anyone to understand. No matter who you are, a would-be accountant, a finance enthusiast, or an investor who would like to understand the inherent transactions of a company, you need to understand how to pass a journal entry before anything else.
Double entry system
Double entry system is the system that is used to record entry in the journal. Let’s understand what double entry system is. Double entry system is a system that has two parts – debit and credit. If you know what a debit and what a credit are, you would be able to understand the entire financial accounting quite effectively.
Let’s understand the rules of debit and credit briefly and then we will see the examples of journal entries –
- Debit the account when assets and expenses increase.
- Debit the account when liabilities and revenues decrease.
- Credit the account when assets and expenses decrease.
- Credit the account when liabilities and revenues increase.
The following examples will help us understand how to debit and credit the accounts in transactions.
Examples of journal entries in Accounting
We will look at several examples here before talking about the format of journal entries. Let’s have a look –
Journal in Accounting Example#1
Mr M buys goods in cash. What would be the journal accounting entry?
As we know the rules of debit and credit, we can see that Mr M is expending cash; that means cash is going out and in lieu of cash, he is receiving goods. That means “cash”, a current asset is decreasing and “purchase”, an expense is increasing.
As per the rule, we will credit the account when the asset decreases and we will debit the account when the expense increases.
So, the journal entry in accounting book would be –
To Cash A/C…..Credit
Journal in Accounting Example#2
G Co. sells goods in cash. Which account will be debited and which account will be credited?
G Co. sells goods in cash meaning cash is coming in and goods are going out. “Cash” is an asset which is increasing and “sales” is a revenue account which is increasing.
As per the rules of debit and credit, when “asset” increases, it is debited; and when “revenue” increases, it is credited.
So, here the journal entry in accounting book would be –
To Sales A/C…..Credit
WallStreetMojo Free Accounting Course
You will Learn Basics of Accounting in Just 1 Hour, Guaranteed!
* Please provide your correct email id. Login details for this Free course will be emailed to you
Journal in Accounting Example#3
Mr U pays off his long term debt in cash. What would be the journal entry?
Here we can see that Mr U is paying cash; that means “cash” is going out. And as a result, his long-term debt is also getting checked off. That means “long-term debt” which is a liability is getting decreased.
As per the rules of debit and credit, when an asset gets reduced, it is credited and when liability gets reduced, it is debited.
So the journal entry in accounting book would be –
Long term debt A/C……Debit
To Cash A/C……..Credit
Journal in Accounting Example#4
More capital is being invested into the company in the form of cash.
In this example, there are two accounts. One is “capital” and another is “cash”.
Here, cash is invested in the business. As we know that cash is an asset, investing in a business means, the asset is increasing.
At the same time, due to the injection of more cash into the business, the capital which is a liability is also increasing. When liability increases, we credit the account.
So as per the rules of debit and credit, the journal entry in accounting would be –
To Capital A/C……Credit
Format of Journal Entries in Accounting
As of now, you know what journal entry looks like. In this section, we will look at the format of journal entry in accounting so that we know how to place them (along with the narration).
In the following example, we will take the same journal entry examples we took above and will sequentially put them into the right format.
|Date||Particulars||L/F||Debit (in $)||Credit (in $)|
To Cash A/C
(Being goods purchased in cash)
To Sales A/C
(Being goods sold in cash)
|14/09/2017||Long term debt A/C……Debit
To Cash A/C
(Being long term debt paid off in cash)
To Capital A/C
(Being cash injected into business as capital)
This has been a guide to what is Journal in Accounting? Here we discuss the journal entries in accounting along with examples, double entry system and format of journal entries. You may also read through our other articles on basic accounting –