Journalising Definition, and Example

                             What is Journalising?

The Procedure of Recording Transactions in the journal is called Journalising. Before a transaction is recorded in the journal, it is essential to analyze the transactions and decide the account should be debited and credited. These entries are called Journal Entries.

Journalising is the process of passing journal entries in the Journal. These entries are passed in Chronological order. As we know every transaction has two aspects, the Debit and the credit.

Once the accounts are identified, the accountant must figure out how the accounts are affected.

The business transaction can then be journalized starting with the account to be debited and the ending with the credited accounts. Each journal entry is typically accompanied with a date and a description of the business transaction.

Definition of Journalising:

                  Journalizing is the process of recording transaction in an accounting journal.

                  

What Does Journalizing Mean?

                   The journalising process starts when a business transaction occurs. Accountants or bookkeepers must analyze each business transaction in order to understand what accounts are affected by the business transaction. Once the accounts are identified, the accountant must figure out how the accounts are affected.

The business transaction can then be journalized starting with the account to be debited and the ending with the credited accounts. Each journal entry is typically accompanied with a date and a description of the business transaction.

What is Journal Entry Format?

Journal Entry format is the standard format used in bookkeeping to keep a record of all the business transactions of the company and is mainly based double-entry bookkeeping system of the accounting and ensures that the debit side and credit side are always equal. The standard format contains 5 columns –

• Transaction Date 
• Particulars of Business Transaction
• Folio Number 
• Debit Entry and 
• Credit Entry.

Transaction Date:

                  The first column in the Journal book consists of the transaction date. The transaction date refers to the actual date on which transaction has incurred and not the date of reporting the transaction

Particulars of Business Transaction (Journal Entry):

                      The second column is where we record the business transaction by passing a Journal Entry. Journal entries refer to the systematic recording of business events and transactions that took place on a given date by applying fundamental rules of book-keeping.

Folio Number:

                     The third column is referred to as folio number, which indicates the reference number used to identify the particular entry in respective ledger accounts. This reference number could be numeric or alphanumeric as well.

Debit Entry: 

                    The fourth column shows the amount by which the respective account is got debit in the transaction.

Credit Entry:

                    Just like column 4, which shows the amount by which account is debited, column 5 represents the amount by which the respective account is get credited.

  Example:

          Let us say on January 10th 2020, ABC Inc. sold 200 units @ 2000usd to Mr. John on credit.

To record the transaction, we will enter the transaction date, which is Oct 15, 2019, in the first column.

In the second column, we will pass the accounting journal entry of the transaction, i.e., we will credit the Sales account (credit all income and gains), and as Mr. John has received the goods on credit and going to make the payment in future, he is the debtor of ABC Inc. By the rule of a personal account, we will debit his account by the amount of sale value (Debit the receiver).

The journal entry format in excel for this transaction will be as follows:

In this Post we have learnt regarding what is Journal and how entries are posted in Journal. Soon will come back with new post.