After analysis of a business transaction, it is recorded in a book known as journal (or general journal). When transaction is entered in the journal, it becomes a journal entry. The process of entering transactions in the journal is referred to as journalizing.
Sequentially, journalizing is the second step of accounting cycle. The first step being the analysis of transaction that provides necessary information required to journalize a transaction.
Journal is sometime called the book of original entry because all transactions are recorded in it in a chronological order as they occur.
Format of general journal
The proper format of general journal is given below:
A journal has the five columns. Their use is briefly described below:
1. Date column
In date column the year, month and date of transaction is entered. The year is entered immediately below the “date” heading. It is written once per page and do not have to be repeated for all entries on the page.
2. Description column
The description column is used to enter the names of the accounts involved in transaction. The debit part of the entry is written first and credit part is written below the debit part. It is common to leave some space from left before writing the credit part of the journal entry.
A brief description known as narration is also written in this column below the credit part of the entry.
3. Posting reference
All journal entries are periodically posted to the ledger accounts. In posting reference column, the page number of the ledger account to which the entry belongs is written. For example, if the cash account is on page number 101 in the ledger, the number 101 would be written in posting reference column where the cash account appears in general journal.
4. Debit column
The amounts of the accounts being debited are written in this column.
5. Credit column
The amounts of the accounts being credited are written in this column.