General Journal

The word “Journal” derived from “Jour” a French word means “Day”. So General Journal or
simply a Journal is a book of first entry in which we record daily transactions. Based on dual
aspect concept of accounting debit and credit aspect of every transaction is to be recorded in
Journal chronologically with short explanation. All the transactions are recorded at first in this
book so it is also called book of First or prime or original entry. On the basis of journal, the
ledger accounts are to be prepared so it is also referred to as an “Assistant of Ledger”.

Entry:

Recording of any transaction in relevant heads of account in a particular book is called entry. If
the transaction is recorded in journal then it is called journal entry and if the transaction is
recorded in ledger then it is called ledger entry.

Simple Entry:

The entry in which one Heads of Account is to be Debited and Credited is called “Simple
Entry.”

Compound Entry:

The entry in which more than one Heads of Account are Debited or Credited is called
“Compound Entry.”

Journalizing:

The process of recording transactions in journal is called journalizing.

Narration:

A short explanation written with each entry in journal is called narration and the journal entry is
considered incomplete without narration.

Ledger Folio (L/F):

It is a page/account/reference number of particular account where the particular account is to be

prepared. It helps for locating the concerned account from ledger.

Specimen of General Journal

It is given in next page with understanding hints

 Account to Amount to
be debited be debited

General Journal
Page # ------
Debit Credit
Date Description/Detail L/F
(Currency Sign) (Currency Sign)

xxx XXX 1 XXX

To XXX 3 XXX

(---------------------)

XXX XXX

Narration

Date of Account to Amount to

transaction be credited be credited
Total
Practice Question

Journalize the following transactions.

Date Transactions Rs.

2016

Feb 01 Mr. Aslam started his business with cash 500,000

„‟ 02 Purchased merchandises 100,000

„‟ 03 Goods bought from Mr. Akbar on credit basis 80,000

„‟ 05 Machinery bought 300,000

„‟ 05 Merchandises sold 200,000

„‟ 08 Sold goods on credit basis to Mr. Rahit 150,000

„‟ 13 Received commission 3,000

„‟ 19 Returned goods to Mr. Akbar 20,000

„‟ 20 Goods returned by Mr. Rahit 15,000

„‟ 26 Mr. Aslam withdrew cash from business for his private use 25,000

„‟ 28 Borrowed from Mr. Akram 50,000

„‟ 29 Paid Rent for the month 10,000

 Solution
General Journal
Page # 01
Debit Credit
Date Description L/F
Rs. Rs.

2016

Feb 01 Cash A/c 1 500,000

To Capital A/c 2 500,000

( Initial Investment made in business)

„‟ 02 Purchases A/c 3 100,000

To Cash A/c 1 100,000

( being the purchases of goods on cash basis)

„‟ 03 Purchases A/c 3 80,000

To Accounts Payable- Mr. Akbar 4 80,000

( Being the purchase of goods on credit basis)

„‟ 05 Machinery A/c 5 300,000

To Cash A/c 1 300,000

( Being the purchase of machinery on cash

basis)

„‟ 05 Cash A/c 1 200,000

To Sales A/c 6 200,000

( Being the sales of goods on cash basis)

„‟ 08 Accounts Receivable- Mr. Rahit 7 150,000

To Sales A/c 8 150,000

( Being the sale of goods on credit basis)

Total C/F 1330,000 1330,000

 Page # 02

Debit Credit
Date Description L/F
Rs. Rs.

Total B/F 1,330,000 1,330,000

„‟ 13 Cash A/c 1 3,000

To Commission A/c 9 3,000

( Being the receipt of commission)

„‟ 19 Accounts Payable- Mr. Akbar 4 20,000

To Return outwards A/c 10 20,000

( Being the goods returned to supplier)

„‟ 20 Return inwards A/c 11 15,000

To Accounts Receivable- Mr. Rahit 7 15,000

( Being the goods returned from customers)

„‟ 26 Drawings A/c 12 25,000

To Cash A/c 1 25,000

( Being the amount withdrawn by the owner for

his personal use)

„‟ 28 Cash A/c 1 50,000

To Loan - Mr. Akram 13 50,000

( Being the loan taken)

„‟ 29 Rent A/c 14 10,000

To Cash A/c 1 10,000

( Being the payment of rent)

Grand Total 1,453,000 1,453,000

 Muhammad Shafiq Kaleem

Lecturer – Accounting & Finance

Virtual University of Pakistan

Note: Please consult recommended books mentioned in “books” Tab of

VU-LMS for more practice.