General Journal in Accounting | How to Prepare Journal Entries?

General Journal in Accounting | How to Prepare Journal Entries?


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today we have a topic with us is general journal okay as a name itself the
journal the general journal is an initial or it’s called the journal
entries let’s make this simple the journal entries is an initial
record-keeping which records all the transaction except for the ones which
are recorded a specific a specialty journal like you know cash journal we
have purchase journal so whenever any event occurs or a transaction happen it
is recorded in a journal and journal can be divided into two types speciality
journal and general journal these are the two types so a speciality journal
records all these sort of I can call the special events transaction that are
related to that particular journalist and there are mainly four kind of
speciality Journal one is called the sales another is called the cash
receipts okay then there is a thing called
purchase general cash disbursement journal forget there’s are the four
types but the company can have more speciality journal depending on its
needs and the type of the transaction but the above over here for that have
been mentioned contains the bulk of the accounting activities and all of the
transaction which are not entered into this facility journals are accounted in
the general journal so this can have the following types of transaction like
account receivables accounts payables with this is known as your debtors this
is your creditors then we have a thing called equipment we
have the accumulated depreciation we have expenses interest income it also
includes expenses okay now we’ll try and discuss the journal general journal
accounting part ok the double-entry bookkeeping is the most common method of let me just write double-entry
bookkeeping system is the most common method of general journal accounting no
this is the most common method of accounting every business is done by
exchange between you know the transaction is done by exchange between
two accounts so there are equal what we call as opposite accounts for all the
transaction namely the there can be credit and debits both are possible
hence when a transaction is recorded in a journal it debits one account and it
credits another one okay so for example let’s say for company let’s say it
purchases of $5000 of inventory now using the cash and inventory in the
journal would be made where by cash account is decreased the cash account is
decreased let’s say by 5000 and the inventory up will be increased by
5000 years okay now I will provide you with the format part of the
journal with the general journal format it provides the chronological order of
all non-specialized at consists of 4 or closely 5 columns now the first
one starts with date of transaction then there is a short description they also
goes with mem then there is debit amount then there is a credit amount post facto
there is a reference number and the referencing to the journal ledger is a
very easy indicator okay remember that now let’s take an example over here
let’s look at few examples let’s say you purchase an asset in that asset you
purchase that asset by cash and let’s say that is machinery and you purchased
it by cash so machinery account is debited cash account is credited to the
extent of let’s say you purchased the machinery for $1,00,000 so this
will be debited because machine is coming in in your company cash you have
paying and that is going out so it will be credited debit what comes in credit
what goes out now let’s say you incur some expenses let’s say selling and
distribution expenses that you do expense debit and income credit let’s
say you are doing this expense by cash and it is $5,000 so 5000 debit over here and 5000 cash is going on credit let’s
say now take up and foreign income let’s say you are receiving an income so cash
is coming in and the income is the interest income so interest income
account credit because debit the expense credit the income I’ll take the same
amount here we took one of asset now let’s take one of liability let’s say
you purchase that same machinery but not with cash but with the help of or
liability let’s say you you purchased on credit so creditors will open up let’s
say you purchase from Glen Smith and come and that was of 1,00,000 so the
above entry now converts to instead of cash there’s a liability that is
standing so there are a couple of examples that you need you need to
understand so that you know you have a great idea about exactly what’s going on
now the flow of the process of the journal entries now let’s look at the
flow of the process of journal entries before and after it is recorded in the
journal accounting now before an entry is made in journal entries they make
maker has to decide you know accounts which will be affected by the
transaction and second which accounts to debit and which to credit now after
these entries are properly made in the journal in the accounting all this
transaction is summarized right and it is posted in ledger now a ledge over
here is an account of the final end which is a master account it is the
master account that summarizes the transaction in the company and it has
individual accounts that records your assets your liabilities
equity your equity than your revenues you have expenses gains and
losses now some example of accounts are in the ledger our account receivables
accounts payable so this is a your asset this is your liability then you have
your retained earnings which is your equity liability could you account then
let’s say you do product sales so that goes with your revenue just taking one
one example of all let’s say cost of goods sold so that goes as expense
so to summarize every accounting transaction is stored in a journal which
acts as an intermediary repository of the information which is then recorded
in the general journal ledger so the ledger in turn is used to aggregate this
information into the financial statement of a business which are called as the
initial trial balance okay so let me make my final conclusion on this the
general journal is initial record-keeping which records all the
transactions except for the ones which are recorded in this specialty journal
like cash purchase journal and it states that the date of the transaction the
description credit debit information in the double bookkeeping system and the
journal entries are then used to form a ledger and the information is
transferred into the respective accounts of the ledger of the ledgers are then
used to make trial balance and finally the financial statements however these
journals were more visible in the manual keeping record-keeping days so with the
advent of the technology the task of record-keeping has been made very easy
with all the information being stored in a single repository with no speciality
journals in use so that’s it for this particular
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