Debitoor Dictionary

Accounting terms explained simply

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  1. Accounts receivable
  2. Double entry bookkeeping
  3. General ledger
  4. Accounts payable

Journal - What is the journal?

The function of the journal is to provide an original entry for those types of transactions which do not readily fit into the books of original entry

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Once upon a time, the journal was the only book of prime accounting entry in use. All financial transactions were entered in the journal prior to posting the ledger. It was the first location that a transaction was recorded in the manual entry system.

As accounting developed however, the use of the journal alone was inadequate. We now have the sales ledger, also referred to as Accounts Receivable, the Purchase ledger, also referred to as Accounts Payable, and the Nominal ledger, also referred to as the General ledger.

The presentation of the journal reflects the double-entry principle – for every debit entry there is a corresponding credit entry. When managing a journal, it’s recommended to enter as much detail as possible in the event that you may need to revisit and explain your postings.

The journal today

Today, the journal is used only to record transactions which cannot be entered into any of the other books of original entry. For example, journals are commonly used for the following:

• The correction of errors

• Transfer of balances between accounts

• Opening entries for a new business

• Period end adjustments

Each entry refers to a transaction, and typically include details split into columns including: the date, the amount, the account, a short description, an indication of whether it is a debit or credit, and a posting reference (when the entry was posted to the ledger account).

Does your business need a journal?

Almost all businesses today have some form of general journal. If a traditional manual entry system is used, then it is up to the particular business which other journals to create for the purposes of their business.

However, with the introduction and rapid growth of accounting software, a journal requiring manual entries is generally no longer necessary.

Journals and Debitoor

Debitoor has fully integrated the functions of a journal. This means that whenever you enter and categorise an expense or enter payment on an invoice, it is automatically saved and updated in your accounts.