Recording of transactions helps to make the financial statement accurate. Recording of transaction in journal helps small firms to keep their track of transactions upto date. Hence small firms may adopt the journal system.

All business transaction which are of monetary value need to be recorded in journal in chronological order.The process of making the journal entries is called as journalization. All the transactions are having two affects i.e. debit and credit.

Journal is a book in which all the business transactions are recorded in chronological order. All entries from journal are transferred to the ledger account. The process of transferring the entries from journal to ledger is called posting.

Journal has been derived from the french word 'jour' which means day. Journal is a book of original entry which records day to day transactons of a firm. It is the book where transactions are recorded for the first time. Hence, it is called book of original entry.

Journal has been derived from the french word 'jour' which means day. Journal is a book of original entry which records day to day transactons of a firm. Hence, the french word 'jour' means day.

Books of original entry refers to the accounting journal in which business transactions are initially recorded. The information in these books is the summarized into a general ledger, from which financial statements are produced. Each accounting journal contains detailed records for the types of accounting transactions pertaining to a specific area. Examples of these accounting journals are:

After analyzing and preparing business documents, the transactions are then recorded in the books of the company. A journal entry is the recording of a business transaction in the journal. A journal entry shows all the effects of a business transaction as expressed in debit(s) and credit(s) and may include an explanation of the transaction. A transaction is entered in a journal and before it is entered in ledger accounts. In double-entry accounting transactions are recorded in the journal through journal entries. A journal, also known as Books of Original Entry, keeps records of business transactions in a systematic order. Transactions are recorded in the journal in chronological order, i.e. as they occur; one after the other.

Accounts relating to properties or assets are known as "Real accounts". A separate account is maintained for each asset. E.g. Cash, Machinery, Building, etc. Real accounts can be further classified into tangible and intangible.

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, drawings, capital, etc.

As per various laws, the audit of accounts is being done by the competent and professionally qualified persons. The audit of accounts record is done by qualified accountants and authorized by the concerned government . For example, cost audit is done by cost accountant, statutory audit and tax audit is done by chartered accountants, etc/. These professionals charge their fees for auditing of accounts. The amount, which is paid to the auditors for auditing the accounts, is called as audit fees.

Accounts relating to income, revenue, gain, expenses and losses are termed as nominal accounts. These accounts are also known as fictitious assets as they do not represent any tangible asset. A separate account is maintained for each head or expense or loss and gain or income. Wages account, Rent account, Commission account, Interest received account are some examples of nominal account. The rule for nominal accounts is: Debit all expenses and losses; Credit all incomes and gains.

All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts".

Accrued income is the income which has been earned during a particular accounting period, but has not been received till the end of that accounting period. So, they grow by addition and stay due to being received in the forthcoming accounting periods.

The process of recording transactions in the book of original entry is known as journalising. The transactions are recorded in the form of a Journal entry. 

Real accounts usually show a debit balance.

A Journal is called the book of prime entry because all the transactions of a business are first recorded in a Journal, i.e. book of original entry. The transactions are recorded in chronological order and on the basis of the source documents. After recording, these transactions are posted to the ledger accounts, i.e secondary books. Hence, a Journal is called the book of prime entry. 

When goods are sold, the transactions should be recorded in the book of original entry, i.e. Journal. All the business transactions of a business are recorded in the Journal and, thus, it is called as the book of original entry. Hence, the entries for the goods sold should be recorded in the journal.

Transactions are recorded daily in journal and hence it is named so. As soon as a transaction takes place its debit and credit aspects are analyzed and first of all recorded chronologically in a book together with its short description. This book is known as journal. The most important function of journal is to show the relationship between two accounts connected with a transaction. Since transactions are first of all recorded in journal, it is called book of original entry or prime entry .

Assets and Liabilities accounts are Real A/cs. The assets have a debit balance whereas liabilities account have a credit balance. Thus, the Real A/c may have debit or credit balance. 

Personal accounts deals with persons, i.e. human being and artificial judicial persons such as companies, government organisations, HUF, etc.

The personal A/c as the name suggests are of people. The rule for the Personal A/c is Debit the receiver and Credit the giver. The creditor is a person who lends us or gives us money. Thus, we shall credit the creditor A/c. So, any personal account showing a credit balance will be called a Creditor.

It is a false statement because, normally liabilities account shows the debit balance is called creditors.

Nominal accounts are fictitious assets that are associated with expenses, losses, revenues and gains of the firm, such as rent and rates account, travelling expenses A/c, the commission received A/c, interest paid A/c.

A transaction should be recorded first in a journal because journal provides complete details of a transaction in one entry. Further, a journal forms the basis for posting the transactions into their respective accounts into ledger.

A ledger is known as the book of final entry or secondary entry whereas, a Journal is known as  the book of original entry because all the transactions of a business are first of all recorded in the Journal from the source document and from the Journal, these entries are posted to the Ledger accounts. Hence, a ledger is known as the book of secondary entry or final entry, as they are posted from the Journal and the balances of these accounts are used to prepare the financial statements of the business.

Current account is the account on which overdraft facility is allowed by a bank. This facility is provided to the current account holders according to the business needs. It allows a trader to withdraw excess amounts over the amount deposited in the bank account up to a prescribe limit. Overdraft facility is provided to a business for meeting its various business needs and not the proprietor's personal account. A business opens a current account with a bank and overdraft facility is provide on the current account of the  business.

Keeping the kind of books for recording the business transaction depends on the business need but there are two important books which are essentially to kept by each business i.e. journal and ledger. Any transaction which occurs in the business need to be first recorded in journal first. Hence all the original entries can be found from journal itself. 

Accounts recording transactions with a person or group of persons are known as personal accounts. These accounts are necessary, to record credit transactions. Personal accounts are of the following types:

Journal is called as subsidiary books because it does not give any summarized details about an account. Journal merely helps the posting of entries in to ledger.

All business transaction must be recorded as soon it occur. 

Every business transaction must first be recorded in journal. Hence all original entries are found in journal itself which is a subsidiary books. Subsidiary books of accounts are also called book of original entry as all the transactions are recorded originally or at the first instance in these books.

Every business transaction must first be recorded in journal. Hence all original entries are found in journal itself which is a subsidiary books. Recording a transaction is also known as journalizing.

Every business transaction must first be recorded in journal. Hence all original entries are found in journal itself which is a subsidiary books.

There are 5 columns in a journal:

Every business transaction must first be recorded in journal. These are called journal entry. Hence all original entries are found in journal itself which is a subsidiary books. 

Goods distributed as free samples are products given away by a business usually for promotional reasons.

The goods distributed as free samples do not have a sales value and therefore cannot be recorded in the accounting records as sales.

The free product samples do however have a cost which needs to be removed from the cost of sales account and recorded as an expense. The expense account used will depend on the reason the goods were distributed as free samples and might include for example sales and marketing, promotion, advertising, charity or simply a free samples expense account.

Journal Entry :- 

Advertisement A/c Dr.

To Purchase A/c

Subsidiary books are those books where the original entry of a transaction is recorded. Sales day book records credit sales , all credit purchases are recorded in purchase day book and all cash transactions are recorded in cash book. 

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

A bearer cheque received from a party and not deposited in the bank, can be given to any third party for making the similar payment to the latter. This is known as endorsement. On endorsement of cheque to the third party the cash column must be reduced so that it gets recorded in the cash column on the credit side of the cash book. It should be noted that when the cheque was received, it must have been recorded in the cash column on the debit (receipt) side of the cash book.

There are no entries passed in the books of the consignee for the consignment of goods sent by the consignee and also for any expenses incurred by the consignor.

Unexpired insurance is an another term which is used for prepaid insurance. Prepaid insurance is deducted from the insurance premium expenses account in profit & loss account and shown in balance sheet as current assets.  These accounts are not in the name of a specific person but are represented as personal account.

No entry is made in the books of account. The consignee is not the owner of the goods and therefore he makes no entry when he receives the goods. The consignor's account will be closed by debiting it with cash or final bill or draft in settlement.

 Ledger Folio , abbreviated as L.F., is a column in the journal where in the page number of the ledger book on which the relevant account appears is recorded. In the journal, this column is filled up at the time of posting and not at the time of making journal entry.

Real accounts contain the balances of assets, liabilities, and owners' equities at a specific point in time, such as at the close of business on the last day of the year. The balance in a real account is the net amount after subtracting decreases from increases in the account.

It's the real accounts that show the assets, liabilities and owner's equity in a company. 

Cash, accounts receivable, accounts payable, notes payable and owner's equity are all real accounts that are found on the balance sheet.

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

Journal is a book of accounts in which all day to day business transactions are recorded in a chronological order i.e. in the order of their occurence. 

Transactions when recorded in a Journal are known as entries.It is the book in which transactions are recorded for the first time.

Accounts relating to properties or assets are known as "Real accounts". A separate account is maintained for each asset e.g. Cash, Machinery, Building, etc. Real accounts can be further classified into tangible and intangible.

 Outstanding Salary A/c is a Representative Personal Account as it represents a group of people to whom some amount of salary is payable. 

Similarly other outstanding and prepaid expenses also fall under the category of representative personal accounts.

 An Artificial person is an entity that is recognized by the law as a Legal Person i.e. an entity holding legal rights and duties distinct from the individuals whom comprise it.

For example: A registered company is a person in the sense that it can sue or be sued, as well hold property etc. in it’s own name.

A company is not however, an individual or natural person.

Personal accounts are related to individuals, firms, companies, etc. A few examples of personal accounts include debtors, creditors, banks, outstanding/prepaid accounts, accounts of credit customers, accounts of goods suppliers, capital, drawings, etc.

There are mainly three types of accounts: Real, Personal and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural, and Representative. 

Journal book is meant for recording all such transactions for which no special journal has been maintained in the business. Therefore, in this journal, all such transactions are recorded which do not occur frequently and for these transactions no special journal  is required. For example, if Machinery is purchases on credit, it will be recorded in the journal book, because in the cash book only cash purchases of machinery is recorded. Similarly, many other transactions, which do not find their place in the special journals will be recorded in the General Journal such as:

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced. Each accounting journal contains detailed records for the types of accounting transactions pertaining to a specific area. Examples of these accounting journals are:

Journal book is meant for recording all such transactions for which no special journal has been maintained in the business. Therefore, in this journal, all such transactions are recorded which do not occur frequently and for these transactions no special journal  is required. For example, if Machinery is purchases on credit, it will be recorded in the journal book, because in the cash book only cash purchases of machinery is recorded. Similarly, many other transactions, which do not find their place in the special journals will be recorded in the General Journal such as:

Journal book is meant for recording all such transactions for which no special journal has been maintained in the business. Therefore, in this journal, all such transactions are recorded which do not occur frequently and for these transactions no special journal  is required. 

Accounting cycle is a step-by-step process of recording, classification and summarization of economic transactions of a business. It generates useful information in the form of financial statements including  income statement, balance sheet, cash flow statement and statement of changes in equity.

Trading account is nominal account which is prepared at the end of accounting year. It helps to find out gross profit or gross loss during the accounting period. 

Prepaid expenses are those expenses which have been paid in advance and related benefits are not consumed within the same accounting period. The benefits of expenses incurred are carried to the next accounting period. Examples-prepaid salary, prepaid rent, etc. Prepaid expenses are recorded in the books at the end of an accounting period to show true numbers of a business.