A journal serves as the primary book of accounts where all business transactions are recorded systematically in chronological order. Each transaction entered in the journal is known as a journal entry.
Since it is the initial record of financial transactions, the journal is often referred to as the "Book of Original Entry" or the "Book of Primary Entry."
Importance of the Journal
Business transactions are classified into various account categories, including assets, liabilities, capital, revenue, and expenses. Each transaction affects two accounts, following the double-entry accounting principle, where one account is debited while the other is credited. The process of documenting transactions in the journal is called "Journalising."
For small businesses, a single journal book is typically sufficient to record all transactions. However, in larger organizations with high transaction volumes, different types of specialized journals, known as "Special Journals," are used to categorize transactions based on their nature.
Journal Format
A journal follows a structured format with designated columns for recording financial transactions systematically. The primary components of a journal entry include:
Date Column: The date of the transaction is recorded, including the month and accounting year.
Particulars Column: The accounts affected by the transaction are listed as follows:
The first line records the account being debited, followed by "Dr." at the extreme right.
The second line, indented from the first, records the account being credited, preceded by "To."
A brief narration enclosed in parentheses follows, explaining the transaction. A horizontal line is drawn after each journal entry for clarity.
Ledger Folio (L/F) Column: This column contains the reference page number in the ledger where the corresponding accounts are posted, facilitating easy tracking.
Debit (Dr.) Amount Column: The monetary value to be debited is recorded in this column alongside the respective account.
Credit (Cr.) Amount Column: The monetary value to be credited is recorded in this column alongside the respective account.
Example: Electricity Expenses of shop ₹920/- paid on March 1, 2025.
At the end of each page, the total of both the debit and credit columns is calculated, ensuring they balance. If the journal entry continues to the next page, the total is carried forward with the notation "Total carried forward (c/f)," while the following page starts with "Total brought forward (b/f)."
This structured approach ensures accuracy, consistency, and transparency in recording financial transactions systematically in chronological order.
In this article, we explore the journal and its format. In the next article, we will learn how to record accounting entries in a journal. Be sure to read it to learn more!