The very first record of all the financial transactions are recorded in the journal and the process of recording these entries is known as journal accounting. The major reason of recording and reconciling these entries is that they can be used in future for the preparation of financial statements of the company and to calculate the profit and loss figures of a business. The journal entries are then transferred to the official record of general ledger where they are formulated and used further for calculations. In journal accounting the entries are added in the form of double entry accounting system and are recorded in the form of simple bookkeeping. The most important figure that is stated through journal accounting is the date of the transaction and the amount involved in transaction.
Journal entries are done with a very simplistic approach. An example of journal entries can be shown in data below:-
For example we want to record a transaction that results in an increase in the asset in the form of cash $10,000. The owner equity is increased by $10,000. In journal accounting these entries are made as under:-
The description of these journal entries can be described as follows. The owner invested 10,000 dollars in the business. The investment results in the increase in the assets and the owner’s equity in the business is also increased by 10,000 dollars.
In order to make an accurate journal entry it is very important that one must identify journal entries, then these entries must be analyzed and at the end these entries must be journalized.
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