Meaning Features Functions Advantage Limitations Format of journal Steps in journalising Rules of journalising Meaning of goods Illustration Exercise

1. School of commerce&Management

2. I would like to express my special
thanks of gratitude to my teacher
(Pragya Bhargav Ma’am (my mentor);
Assistant professor ; school of
commerce & management ) who gave me
the golden opportunity to do this
wonderful project on the topic (Cash-
Flow Statement),which also helped me in
doing a lot of Research and I came to
know about so many new things I am
really thankful to them.

4. Content :
 Meaning
 Features
 Functions
 Advantage
 Limitations
 Format of journal
 Steps in journalising
 Rules of journalising
 Meaning of goods
 Illustration
 Exercise

5. Meaning :
Journal is a book of
original entry in which the
transaction are recorded
first of all, as and when
they take place.

6. Features of journal :
It is a book in which the transaction are
recorded first of all, as and when they take
place.
It is daily accounting record.
In journal, transaction are recorded in a
chronological order i.e., in a date-wise order.
Each entry in the journal is followed by a
brief explanation of the transaction which is
called “narration”.
A journal is only a book of original entry.

7. Functions of Journal :
a. To keep a chronological order(i.e. date-
wise) record of all transaction.
b. To analyse each transaction into debit
or credit aspects by using double-
entry system of book-keeping.
c. To provide a basis for posting into
ledger.
d. To maintain a identity of each
transaction by keeping a complete
record of each transaction at one
place on a permanent basis.

8. Advantage of a Journal :
The possibility of omission of a
transaction is minimised due to
regular transaction entered.
Easy to locate each transaction
due to recording in chronological
order.
Easy to post into ledger.
It is a permanent record of
transaction.

9. Limitation of Journal :
 It is very bulky and voluminous in
size due to huge transaction.
 It is very costly.
 Need a proper knowledge to
record a transaction.
 It is very time consuming process.

10. Format of journal :
Date Particulars
Ledger
Folio (L.F.)
Amount
Dr.
₹
Amount
Cr.
₹

11. Steps in journalising :
 Before recording a journal entry, it is essential to
analyse a transaction in order to determine the two
accounts which are affected.
 It is not necessary to use word “A/c” after personal
accounts.
 After every journal entry, a line should be drawn in
particular column, so that each entry is separated
from preceding one.
 At the end of each page, both Dr. & Cr. Columns
totalled up in front of each other. The word “carried
forward C/F” written at the end of each page and
the word “brought forward B/F” written on the
beginning of next page.

12. Rules of journalising :-
• Personal accounts – ‘Debit the
receiver’ & ‘Credit the giver’.
• Real accounts – ‘Debit what comes
in’ & ‘Credit what goes out’ .
• Nominal accounts – ‘Debit all
expenses’ & ‘Credit all income’.

13. Meaning of Goods :-
Goods account is classified into five accounts for
purpose of passing journal entries:-
i). Purchase A/c – when goods are purchased, instead of
written Goods A/c ‘purchase a/c’ debited.
ii). Sales A/c – when goods are sold.
iii). Purchases return A/c
iv). Sales return A/c
v). Stock A/c

15. Q 1. From the following transactions prepare journal of Gopal
Date
2016
Apr.3
Bought goods from Kanu ₹ 20,000 at a trade discount of 10% and
cash discount of 5%. Paid 50% amount immediately.
Apr.4 Sold goods to Y for ₹ 10,000
Apr.8 Cash deposited into bank ₹ 20,000
Apr. 20 Cash paid to Cham ₹ 6,000
Apr.25 Cash received from Y ₹ 9,500 in full settlement
Apr. 28 Proprietor withdraw for private use ₹ 2,000 from office and ₹ 5,000
from bank
Apr.30 Paid rent ₹ 2,000 and trade expenses ₹ 1,000
Assets on 1st April 2016 – cash ₹ 8,000; bank ₹ 10,000; stock ₹ 50,000; building ₹
90,000; debtors ₹ 6,000 (Pawan ₹ 4,000; Rahul ₹ 2,000)
Liabilities on 1st April 2016 – creditors ₹ 10,000 ( Cham ₹ 6,000; John ₹ 4,000);
capital ₹ 2,00,000.

16. Sol…. Journal of Gopal
Date Particulars L.F.
Dr. Amount
₹
Cr. Amount
₹
2016
Apr.1
Cash A/c Dr.
Bank A/c Dr.
Building A/c Dr.
Stock A/c Dr.
Debtors A/c Dr.
Goodwill A/c
To Capital A/c
To Creditors A/c
(assets and liabilities brought
forward)
8,000
10,000
90,000
50,000
6,000
46,000
2,00,000
10,000
Apr.3 Purchases A/c Dr.
To Kanu
To discount received A/c
To cash A/c
(goods purchased and discount
received)
18,000
9,000
900
8,100
C/F 2,28,000 2,28,000

17. Continue….
B/F 2,28,000 2,28,000
Apr.4
Y’s A/c Dr.
To sales A/c
(goods sold to Y)
10,000
10,000
Apr.8
Bank A/c Dr.
To cash A/c
(cash deposited into bank)
20,000
20,000
Apr.20
Cham’s A/c Dr.
To cash A/c
(cash paid to Cham)
6,000
6,000
Apr.25
Cash A/c
Discount A/c
To Y’s A/c
(cash received from Y)
9,500
500
10,000
C/F 2,74,000 2,74,000

18. Continue…..
B/F 2,74,000 2,74,000
Apr.28 Drawings A/c Dr.
To cash A/c
To bank A/c
(withdrew cash)
7,000
2,000
5,000
Apr.30 Rent A/c Dr.
Trade expenses A/c Dr.
To cash A/c
(expenses paid)
2,000
1,000
3,000
Total 2,84,000 2,84,000

19. Q 2. Pass journal entries for the following :-
i. Received ₹ 20,000 from Subhash, which
were written off as bad-debts in the
previous year.
ii. Salaries due to clerks ₹ 50,000.
iii. Out of the rent paid this year, ₹ 10,000 is
related to next year.
iv. Provide 10% depreciation on furniture
costing ₹ 50,000.
v. Provide 12% interest on capital amounting to
₹ 10,00,000.

20. Sol... Journal
Date Particulars L.F.
Dr. Amount
₹
Cr. Amount
₹
Cash A/c Dr.
To bad-debts recovered A/c
(cash received from Subhash,
previously written off as bad-debts)
20,000
20,000
Salaries A/c Dr.
To Outstanding salaries A/c
(salaries due to clerks)
50,000
50,000
Prepaid rent A/c Dr.
To Rent A/c
(rent paid in advance)
10,000
10,000
Depreciation A/c Dr.
To Furniture A/c
(depreciation on furniture)
5,000
5,000
Interest on capital A/c Dr.
To capital A/c
(interest provided on capital)
1,20,000
1,20,000

22. Journalise the following transactions (Or)
Record the following transactions in a Journal
• Ibrahim a sole proprietor Commenced business with a
capital of 2,00,000.
• Bought Furniture for cash 20,000.
• Paid Rent to the shop owner Mr. Murugan 5,000
• Paid cash into bank 1,50,000
• Bought Goods for cash 10,000 from Shamir Jain
• Sold goods for cash 12,000 to Mr. Narayan Tiwari
• Bought Machinery from M/s Boolani Machinery and paid by
cheque 25,000
• Received commission from M/s Orion Traders for giving a
trade lead 500.

23. Q 2. Make journal :-
1.Business started with cash 8,000 and plant &
machinery 3,000.
2. Stock purchase for sale (cash purchase)= 3,000,
credit purchase = 5,000
3. Wages paid 120,000(including 20,000 of future
year).
4. Salary paid 200,000 but due 110,000.
5. Sale made for cash 600,000 & on credit 800,000.
6. Depreciation 10 percent on plant & machinery.
7. Goods costing 20,000 destroyed by fire.
8. Payment made to creditor of 200,000 at 10 %
discount.

24. THANK
YOU

25. Presented by :-
Yamini Kahaliya
BBA (Honors’)