December 6, 2021


Accounting + Finance Blog

Meaning of Journal books: Key Explanations and Format

Meaning of Journal books: Key Explanations and Format

A Journal book or “The Journal” or simply “General Journal” is one subsidiary book that may never go in extinction. Whether you use manual accounting processes or computer-based accounting software, this book of original entry is necessary as a first line of entering transactions.

Definition of Journal Book

It is a book used to record transactions that cannot be recorded in other types of prime books.

It can also be defined as a book that records chronologically each day transactions.

Note that prime books are another name for subsidiary books.

Key Explanations

It is used to record business transactions. A Journal is used to record the business transaction for an organisation. These transactions are mostly monetary and occur daily. For example, payment of electricity bill, purchase of goods, sales transactions, and so on.

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Other records not in other prime books are recorded in The Journal. However, many organisations use General Journal as their book of original entry, thereby cutting out the other books like sales day books.

This means that all transactions must pass through the Journal book. Therefore, this book becomes the first line of entry in an accounting cycle.

The Journal book is usually in the following style:


Name of account to Debit

Name of account to Credit

A narration or explanation of the transaction.

The narration is important because it tells the purpose and authority of the transaction. More to it, it helps someone without knowledge of the transaction to understand it.

Format of The Journal

Below is the format of a journal book.

Meaning of Journal books: Key Explanations and Format

Uses of Journal Book

The daybook is used for several purposes. Below is a list of it.

Opening Entries: If a business begins operation, it can make use of this daybook to record its assets, liabilities and capital.

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Closing Entries: When a business liquidates or bankruptcy occurs, a journal book is prepared to close the accounting record of the firm.

Correction of errors: It is also used to correct mistakes in the books of account of an organisation.

Acquisition and Disposal of fixed assets. If a firm buys or sells non-current assets, a journal entry is raised, especially if the transaction is on credit or does not involve the use of physical cash. When cash is used to buy or sell fixed assets then the transaction goes into the cash book.

Adjusting entries: Adjusting entries are majorly depreciation, provisions/impairments of account receivables, accruals and prepayments. This entry passed through the General Journal.

Transfer between accounts: If an entity wants to transfer an amount from one account to another, then it does so with this book.

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To conclude, journal books are vital to a business. While it is used to enter any type of transaction. However, its main purposes are to record business events that cannot be recorded in other subsidiary books.