In accounting and bookkeeping, journal records the business financial transactions orderly. The purpose of this record is to record the data including the number of transaction, transaction names, and the period. This recording process is known as a journal. Accounting Journal is also known as the main entry book since the transaction is first recorded or adjusting the entry.
Understanding the basic accounting is needed to have a better understanding on accounting journal , especially the accounting cycle. Accounting cycle is the data processing consists of the transaction sequence based on the transaction note to produce a financial statement.
Preparing journal is the first activity in the accounting cycle. Means, before making the journal, the transaction data should be collected and analyzed first. Without precise and proper data the accurate journal can not be produced. Make sure the transaction note is available and valid data to produce the reliable journal.
Here are some points to create accounting journal easily:
- Profit Loss Report. You are required to understand each of the contents of balance and profit loss.
- Accounting equation. In the accounting equation, the property belong to the company is named asset, on the left side and on the right side is the expenditure sources consists of creditors’ right or liabilities, owner’s right or equity, or capital. The analysis tool used is the accounting equation. The accounting equation shows the similarity between asset to liabilities.
- Debit and Credit Rules. Asset = Liabilities + (Capital – Prive) + (Revenue- Cost). Revenue and expenses appear in the parentheses within the accounting equation since it influences owner’s capital.
Note:
On Assets: Debit if the value increases, or Credit when the value is reduced.
On Liability: Debit if the value is reduced, or Credit when its value increases.
Owner’s Capital: Debit if the value is reduced, or Credit when the value increases.
On Prive: Debit if the value is reduced, or record Credit when the value increases.
On Revenue: Debit if the value is reduced, or Credit when the value increases.
At Cost: Debit if the value increases, or Credit when the value is reduced
