What is a journal and how to write it in an account | chapter 1: introduction
Journal Function Is To Analyze The Business Activities Based On Accounting Principles, Identify The Transaction Type Of Its Activities And Record Them In The Appropriate Account Accordingly.
Important : Journal Is The Engine Of Accounting, No Matter What Software You Use To Record Business Activity In Accounting, All Software Development Is Journal Based. Eg (SAP ECC, QuickBooks, NetSuite, Sage Intact., TALLY,) So The Journal Is An Important Part Of Accounting But I See Many Students Don't Have A Complete Understanding Of Accounting, For Example, I Am Asking You A Simple Question. You Answer It And Proceed To This Chapter…
Question: You Bought An IPAD Worth $1000 And Gave A Check For $1000 In Exchange. What Is The Transaction For This?
| date | particular | amount | amount |
|---|---|---|---|
| 04/02/2020 | purchase IPAD A/C D | 1000 | |
| to Bank A/C | 1000 |
Remember this before you recorded a transaction.
" According to the accounting concept, a transaction should not be recorded without Personal account details, perhaps if it is a unregistered person(unknown person) transaction then a personal account may be selected based on the nature of the transaction. e.g :
(UR & R) Transaction between unregistered person (unknown person) : Third-party-supplier-A/C, Apple-Supplier-A/C, Electronic-supplier-A/C,
Not only that, whatever report you prepare in accounting, it is mainly the individual details that are going to be seen by the management, e.g
- Sales report = customer Name,
- Purchase report = supplier name,,
- outstanding = debitors creditors,
- GST, TDS, = person tax details
- receipt, payment = person bank details
"What you need to know from this is that personal account cannot be separated from accounting"
Correct entry for this transaction !
| date | particular | amount | amount |
|---|---|---|---|
| 04/02/2020 | I PAD Purchase A/C D | 100 | |
| To Third-party supplier A/C | 100 | ||
| date | particular | amount | amount |
| 04/02/2020 | Third-party supplier A/C D | 100 | |
| to DB 20001683 BANK A/C | 100 |
| date | particular | amount | amount |
|---|---|---|---|
| 04/02/2020 | I PAD Purchase A/C D | 100 | |
| To Apple-India LTD A/C | 100 | ||
| date | particular | amount | amount |
| 04/02/2020 | Apple-India LTD A/C D | 100 | |
| to DB 20001683 BANK A/C | 100 |
This is a mistake made by 30% of students in calculation, and we will see about the mistake made by 60% of students in calculation in the next chapter. next next2 next2
topics
ABOUT