Book of original entry

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Book of original entry
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Book of original entry is a chronological record of accounting transactions showing the amounts of credits and debits, names of the accounts that are credited or debited and other useful information about the transactions. It is called a book of original entry because every business transaction is first recorded in this book. This book is prepared on the basis of source documents. Entries in this book are recorded in the first stage in contrast to secondary books where recording of entries is in the second stage (B.K. Banerjee 2010).

Journal

More known term of book of original entry is journal which has been divided from the French word Jour which means day. That is why journal means a day record. Journal is a day book because transactions in this book are recorded day to day basis as and when they take place. It gives a complete view of each transaction, that is why journal is a subsidiary book which is subordinate to the ledger book (book of secondary entry). Every transaction in the journal is followed with narration witch describes the context and nature of the transaction. Information in journal is recorded permanently and is foundation for all accounts and final accounts (P. Mohana Rao 2012).

Source documents for preparing journal:

  • coutner-foil of pay-in-slip
  • cheque and cash memo
  • cash receipt

The components of journal include particulars, date, ledger folio, narration, debit and credit amount.

Advantages of maintaining journal book (P. Mohana Rao 2012):

  • chances of omitting a transaction are reduced since all transactions are recorded chronologically
  • understanding of real meaning of a transaction is easier because every journal is followed by a narration
  • detection of errors is easy since double entry system is followed in maintaining the journal book
  • opening, compound, closing, rectification, transfer and adjustment entry are done more precisely

Types of Journals

General journal contains transactions which take place only occasionally and are not included in special journals. Such transactions are recorded in book known as journal proper which include such transactions as (B.K. Banerjee 2010):

While special journal can be subdivided into (B.K. Banerjee 2010):

  • cash book
  • purchase day book
  • sales day book
  • purchase return book
  • sales return book
  • bills receivable book
  • bills payable book

Difference between books of original and final entry

Books of original entry and books of secondary entry can be distinguished as follows (P.C. Tulsian, B. Tulsian 2016):

  • books of original entry are prepared on the basis of source documents while books of secondary entry are based on the books of original entry
  • balancing in the books of original entry (except Cash Book) is not done while in books of secondary entry all the accounts (except nominal accounts) are balanced
  • process of recording entries in books of original entry is called journalising while the same process in books of secondary entry is called posting

References

Author: Sebastian Kopta