It
must have been understood by this time that Journal is used for recording only
those transactions for which there is no special subsidiary book. Moreover, if
the number of transactions of a particular type (say returns inward or outward)
is not large, there is no point in having a separate subsidiary book for such
transactions. These transactions may be journalized. The method of recording
transactions in Journal has already been explained.
Following
transactions are still recorded in the journal:
1. Opening entries:- At the beginning of the year, the opening balances of assets
and liabilities are journalized.
2.
Closing
Entries:- At
the end of the year final accounts are prepared. For preparing these accounts various are to be
transferred to the trading and profit and loss account which is done by means
of journal entries.
3.
Rectification
entries:- When
any error is detected in writing up the books then it is rectified by means of suitable journal
entry.
4.
Adjustment
entries:- Since
accounting follows “accrual concept” therefore adjustment has to be done at the end of the year regarding:
a) Expenses
incurred but not paid,
b) Expenses
paid but benefit to be available in the next period,
c) Income
becoming due but not received,
d) Income
received in advance, and
e) Charging
depreciation on fixed assets, etc.
5.
Transfer
entries:- If
any amount is to transferred from one ledger account to the other, then it is done by means of journal
entries.
6. Miscellaneous entries:-a.)
Purchase and sale of fixed asses on credit,
b.)
Writing off of losses due to bad debt, fire, accidents etc,
c.) Any extra concession to be allowed to any customer or any
charge to be levied after the issue of the invoice, and