Question

Why do all entries have to be recorded in the general journal? What type of backup should exist for each item and what value do explanations provide for these transactions?

Answer 1

General Journal :

1. The general journal refers to a book of original entries, in which accountants and bookkeepers record raw
business transactions, in order according to the date events occur.

2. A general journal is the first place where data is recorded, and every page in the item features dividing columns
for dates, serial numbers, as well as debit or credit records.

3. The source documents of this prime entry book are journal voucher, copy of management reports and invoices.

4. A journal is also named the book of original entry, from when transactions were written in a journal prior to manually
  posting them to the accounts in the general ledger or subsidiary ledger.

Value derived from the explanations from the transactions :

1. A properly documented journal entry consists of the correct date, amounts to be debited and credited, description of the transaction and a unique reference number.

2. Explanations provides the breif of the event or the transaction

3. It explains the nature of the event.

Backup :

1. The backup for any type of item recorded in the general journal are documents, vouchers, agreements, challan,
receipts, Bills Invoices.

2. Invoice is the backup for the sales, Bill is a alternate backup for the expense, Receipts for fees etc