General Journal

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After the financial transaction is analyzed and the debit and credit accounts are identified, then comes the step of recording the entry in the journal.

General Journal:

It is an accounting book in which day-to-day financial transactions are recorded in the form of accounting entries in a chronological order, and are as follows:

Debit	Credit	Description	Entry No.	Voucher No.	General Ledger Page No.	Date
5000		the Bank A/C	1	entry No.3	2	01/10
	5000	To the Cash A/C	1	entry No.3	1	01/10
		Cash deposit to the bank
2000		rent expenses A/C	2	صرف رقم 10	15	01/11
	2000	To the Cash A/C	2	صرف رقم 10	1	01/11
		Rent expense paid in cash

As you notice in the above figure, the Journal contains the following columns:

Debit: In this column, amounts relating to the debit movement of the accounting entry are recorded.
Credit: In this column, the credit amounts relating to the credit movement of the accounting entry are recorded.
Description:In this column, the accounting entry of both debit and credit sides is recorded together with a brief explanation of the entry.
Entry Number:In this column, the entry number is recorded in a sequential manner.
Voucher Number: In this column, the name of the direct voucher (receipt, payment, journal) and its number is recorded, which proves the that financial transaction that occurred.
Ledger page No.: In this column, the account page number in the ledger into which the debit or credit amounts which affected the account will be posted, is recorded.
Date:In this column, the date of the occurrence of the financial transaction is recorded.

Types of accounting entries

Simple journal entry:

This entry contains two accounts only; one of which is recorded on the debit side and the other on the credit side, as follows:

Credit	Debit	Description
	xxx	debit A/C
xxx		To credit A/C

Compound journal entry:

The compound entry contains more than one account on the debit side or on the credit side, or on the both sides, as the following:

more than one account on the debit
Credit	Debit	Description
	xxx	Debit A/C
	xxx	Debit A/C
xxx		To Credit A/C

more than one account on the credit side
Credit	Debit	Description
	xxx	debit A/C
xxx		To Credit A/C
xxx		To Credit A/C

more than one account on the both sides
Credit	Debit	Description
	xxx	Debit A/C
	xxx	Debit A/C
xxx		To Credit A/C
xxx		To Credit A/C

Example

This is a group of transactions carried out by Al Salam Enterprise during the first month of its establishment on 01/01/2020

Transaction No.	Transaction description
#1	On 01/01, the Company started its business with a capital of $ 10,000, half of which was deposited into the bank and the rest on the cash account.
#2	On 10/01, It rented an office to carry out its business against $ 2,500, and it paid this amount in cash.
#3	On 15/01, it purchased furniture from Al-Huda Company with an amount of $ 5,000, half of which was paid in cash and the rest on account.
#4	On 20/01, the Company earned $ 3,000 as revenue and the value was received in cash
#5	On 25/01, the Company paid its debts to Al Huda Company in cash
#6	On 30/01, the Company paid the telephone and internet bill, amounting to $ 200 in cash.
#7	On 30/01, the Company appointed an employee against a monthly salary of $ 500

Required:

Recording the financial transactions in the General Journal.

Answer:

Debit	Credit	Description	N
	5000	Bank A/C From Cash A/C	#1
	5000	Cash A/C
10000		To capital A/C
		Depositing half of the capital into the bank and the other half into the cash account.
	2500	the rent expenses A/C	#2
2500		To the cash A/C
		Rent expenses paid in cash
	5000	the furniture A/C	#3
2500		To The cash A/C
2500		To Al Huda Company A/C
		Purchase of furniture, half of its value was paid in cash and the rest on account
	3000	the cash A/C	#4
3000		To the revenue A/C
		Revenue received in cash
	2500	Al Huda Company A/C	#5
2500		To the cash A/C
		Paying Al Huda Company's account in cash
	200	telephone and internet expenses A/C	#6
200		To the cash A/C
		Telephone and internet expenses paid in cash according to the invoice

Note: The seventh transaction was not registered; because it is not a financial transaction, but rather, an administrative operation that is relating to the Employment Department.

After the financial transactions are recorded in the General Journal, then they will be transferred to the page of each account affected by the financial transaction in the Ledger Book. The process of transferring financial transactions from the General Journal into the General Ledger is called Posting, which is going to be explained in the next lesson.

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