Question

In 200 words or more, Indicate how a journal is used in the recording process in Accounting

Answer 1

Journal is a record of all the financial transactions of the organization with the help of source document in a chronological order. After that, entries in journal are consolidated and then posted to ledger account. Journals are of two types, general journal and special journal. It has details of dates, description, references, debit and credit column etc of a transaction.

If we summarise the accounting process then it is in the following steps: -

1.       Identify Transaction

2.       Obtain source document

3.       Record transaction in journal

4.       Prepare ledger accounts

5.       Prepare trial balance

6.       Prepare financial statements

Thus, journal is used in following ways in accounting process: -

1.       It provides complete list of transaction at one place.

2.       It is easy to find transaction since all transactions are recorded in chronological order basis.

3.       It provides short detail of transactions for future references in narration.

4.       It helps in rectifying the errors in Trial balance, in case it does not tally.

5.       It is easy to transfer the transactions from journal to ledger since it has both debit and credit side of a transaction.

Hence, it is clear the journal is very important record which is like the backbone of the company’s financial statements.

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