03 JOURNAL

WHAT IS JOURNAL

1. Book of accounts where original entries are recorded
2. It includes all types of business accounts
3. shows all necessary info regarding transactions
4. It has date-wise records of all the transactions which help understand time wise events
5. narration provides a brief explanation
6. Its a subsidiary book where all the DAY-TO-DAY transactions are recorded in Debit-Credit format with amounts

STEPS FOR JOURNALIZING

1. Source documents
2. Transactions
3. Ascertain two documents
4. Classification of accounts
5. ascertain debit and credit
6. decide A/c to be debited and A/c to be credited
7. JOURNAL

TYPES OF JOURNAL ENTIRES

1. Simple ( only 2 accounts affected)
2. Combined (More than two accounts affected)

DISCOUNT

• DISCOUNT - Allowance or concession given by the seller of goods to the customer
• Usually given to encourage customers to make prompt payments and establish a business relationship

TRADE DISCOUNT

1. Trade discount is allowed at the time of the purchase
2. Generally given by whole-sellers to retailers
3. NOT recorded in books of accounts

CASH DISCOUNT

1. Concession given to encourage prompt payment
2. cash discount is the normal discount
3. Cash discount is considered as a loss to the receiver of the cash
4. whenever cash discount is given , Discount allowed account should always be debited as an expense in journal book
5. Calculated after deducting trade discount
6. given ON invoice price at time of payment
7. IT IS recorded in the books of accounts