notes

1. MEANING OF JOURNAL…
A journal is the primary books of accounts in which
transaction are first recorded in a date wise order..

2. DEFINITION OF JOURNAL
A journal is a chronological record
of financial transaction of the
business.

3. CHARACTERISTICS OF JOURNAL
 Day to day transaction are recorded in a journal.
 It is a book of original entry in which transaction are
written before are posted in a ledger.
 It is records both the debit and credit side aspect of
transaction by double accounting system.
 A journal is a record in which shows complete
details of transaction in one entry.

4. ADVANTAGES OF A JOURNAL
Journal reduced the possibility of error.
Journal provide an explanation of
transaction.
Journal provide a chronological order.

5. ADVANTAGES OF PETTY CASH BOOK
Time saving the chief cashier’s time.
 Labour saving:saving of labour inwritting up
the cash book and posting into the ledger
control it provide control over small
payment.

6. TYPES OF PETTY CASH BOOK
simple petty cash book
Analytical petty cash book.

7. SIMPLE CASH BOOK
Simple petty cash book is identical
with the cash book.any cash
which the petty cashier recives is
recorded on the left hand side
cash column and any cash pays
out is recorded on right hand side.

8. ANALYTICAL PETTY CASH BOOK
analytical cash book has two side,
left side use to record the reciept
of cash and left side record to use
recording the payment.

9. GOODS TAKEN FOR PERSONAL USE:
Goods taken for personal use
Drawing A/c ….Dr
To purchase
(being the goods taken for
personal use)

10. GOODS GIVES AS CHARITY
Goods given as charity is not sales of goods
The entry passed is :
charity A/c …..Dr
To purchase A/C
(being the goods given as charity,hence credited to
purchase A/c)

11. LOSS BY FIRE THEFT
In both cases, it is loss to business.
The entry passed :
Loss by fire A/c ….Dr
To purchase
(being the loss of goods by theft or fire)

12. When goods (stock) are fully insurfed, loss is to be borne by the
Insurance Company/ the emtgru [assed os “
Insurance co. or Insurance Claim A/c …… Dr.
To Loss by theft or Fire A/c
(Being the loss of goods recoverable from te insurance company)
Insurance c;ao, os am asset amd wo;; ne sjpwm as am asset om
the Na;amce Sheet till the amount is received.
When the goods are partly insured:
Insurance Co. A/c …. Dr. [Claim
admitted]
Profit and Loss A/c ….Dr. [Loss – Claim not
admitted]
To Loss by Theft or Fire A/c
(Being the Insurance claim partially admitted. Balance amount
transferred to Profit and Loss A/c)

13. When claim is received from the Insurance
Company:
Bank A/c ….Dr.
To Insurance Co.
(Being the Insurance claim received)
When the stock is not insured, loss is borne by the
firm. At the end of the year, balance in loss by theft
or fire Account is transferred to Profit and Loss
Account:
Profit and Loss A/c …. Dr.
To loss by theft or Fire A/c
(Being the loss trasnferred to Profit and Loss
Account)

14. TRADE DISCOUNT
Trade Discount is allowed when
the goods are sold to the
purchaser for vesale to the
ultimate consumer or when the
goods are purchase in large
quantity.

15. CASH DISCOUNT
Cash Discount is the
discount allowed to the
debtor for making prompt
payment on for making
payment before due date.

16. ADVANTAGE OF TRADE DISCOUNT
Advantages of Trade Discount. It
improves sales as purchaser is
encourage to buy large quantity. It
reduces purchase cost of purchaser
and the improve profit margin.

17. Simple journal entry
It is an entry two accounts are affect i.e one A/c
is debited another is credited with equal
amount.

18. COMPOUND JOURNAL ENTRY IS AN
ENTRY IN WHICH TWO OR MORE
ACCOUNTS ARE CREDITED.
Compound journal entry