A general journal is a journal that records transactions in a chronological manner, the day-to-day business transactions.
Also, the general journal is used to record transactions that do not fit into other subsidiary books as explained in the previous article (how to keep a financial transactions for small business).
The information to recorded in the general journal about each transaction includes:
The date of the transaction
The debit and credit changes in specific ledger accounts
The narration. The narration is shows the purpose and authority of the transaction.
Uses of the General Journal
General journal is used for the following purposes
Transfer from one account to the other
Purchases and sales of non-current assets on credit.
End of period adjustment
Correction of errors
The general Journal looks like these
Date Particulars Folio Dr Cr
The name of account to debit XX
The name of account to credit XX
A book for Accounting technicians in Nigeria explained that the name of the account to be debited is always shown first.
The name of the account to credit is inset to the right hand side.
The narration is not indented. A blank space should be left after each entry to make each set of journal entries stand out clearly.
ADVANTAGES OF GENERAL JOURNAL
It is economical than the ledger.
It is easy to record.
The naration makes it easier to understand.
It is can be used to correct errors made in the ledger.
Most business can used it to show transactions that took place when they started trading and when they liquidate.