Rules For Journalising

| September 4, 2014 | 0 Comments

How an Entry is recorded in the Journal? Explain in detail that what are the Rules of Journalising the Transaction in the Journal?

Rules For Journalising

How an Entry is recorded in Journal, is discussed below: Suppose the transaction is;

Purchase Furniture from Mr. Faisal Gondal on 4.9.2014 for Rs.10, 000.

Here Furniture account is debited and Mr. Faisal Gondal account is credited.

Rules For Journalising Picture

 

Now the various columns of Journal are explained in details below:

1. Date:

The dare of transaction is written in this column in two lines- in the first line, the year and in the second line , first the name of month and thereafter the actual date.

2. Details:

In this column the names of  the two connected accounts are written in two consecutive lines- in the first line the name of account debited and in the second line the name of account credited. Account debited always Shown close to the left-hand margin line, the name of account credited is commenced a short distance away from the margin line. The arrangement will show clearly which account is debited and which credited. This also shows that credit amount is placed on the right side of debit amount. The word “Dr” is used at the end of the name of debited. It is not necessary to place the word “Cr” after the name of credited account, because if one account is Dr. it follows that the other account must be Cr. Below the names of the two accounts, i.e in the third line Narration is written usually within a bracket. According to tradition, narration is written starting with the word” Being“. But modern practice is not to use this word.

Note:

In most of the countries, (even in Great Britain) using the word “TO” at the beginning of the name of account credited has became out-dated.

3. L.F (Ledger Folio):

The page numbers of the ledger where the two concerned accounts have been posted, are written in this column against the name of each account. This will help locating easily the two concerned accounts from the Ledger. On the other hands, when a transaction is posted to Ledger, the concerned folio number of the Ledger is written in this column. Thus if a folio numbers stands written in the column, it will mean that the transaction has already been posted to Ledger.

4. Amount:

The debit amount is written in the first “Amount” column against the name of account debited and the credit amount in the second “Amount” column against the name of Account credited.

Note:

Although the above form of Journal is used in examination answer book, it is not fully correct. Because in large concerns Journal is divided into eight subdivisions for the sake of convenience. Out of them only in one subdivision (i.e Journal Proper) the above from is used. In remaining seven subdivisions the form of Journal is different.

 

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