The Various Journal Entries

The primary book of account in which financial transactions are first recorded in chronological order, i.e., in the order in which they are entered, is called the journal. The accounting voucher, which is created on the basis of source documents such as cash memos, invoices, purchase bills, and so on, is used to record transactions in the Journal book.

Characteristics of Journal 

1. A journal is a chronological record of daily transactions.
2. It is an original entry book in which transactions are entered first and then posted to the ledger.
3. It uses the Double Entry System of Bookkeeping to record both the debit and credit aspects of transactions.
4. A journal is a record that contains all of the information about a transaction in one entry.
5. Journalising is the process of recording a transaction in a journal, which is referred to as a Journal Entry.

Differences between various Journal Entries

1. Single and compound journal entries-A compound journal entry affects three or more account heads. A basic journal entry consists of only two rows, one debit and one credit, whereas a compound journal entry consists of three or more rows. Instead of recording many individual journal entries for a single accounting event, it is better to merge multiple journal entries of a single accounting event into a single compound entry since it saves time and preserves the relevant debits and credits in one place in the journal.
2. Carriage Inwards and Carriage Outwards -Carriage Inwards refers to the cost of transportation incurred by the buyer of the products, whereas Carriage Outwards refers to the cost incurred by the seller of the goods to deliver the items sold to consumers. Carriage Inward is shown as a direct expenditure in the Trading Account, whereas Carriage Outward is recorded as an indirect expense in the Profit and Loss Account. For recording Carriage Inwards Trading Account should be debited and Carriage Inwards should be credited. For recording Carriage Outwards Profit and Loss Account should be debited and Carriage Outwards should be credited.
3. Return Inwards and Return Outwards-Goods returned to a firm by a buyer are known as return inwards. They are products that were originally sold to external third parties but were returned by the buyer due to quality problems. Sales Returns is another name for them. Return outwards are goods that are returned to the vendor by a purchaser. They are goods that were originally acquired from third parties but were returned to them because they were unsatisfactory; they are also known as Purchase returns. For recording Return Inwards, Sales Account should be debited and Return Inwards should be credited. For recording Return outwards, Purchase Account should be debited and Return Outwards should be credited.
4. Bad Debts and Bad Debts Recovered- An uncollectible debt that is ultimately worthless to the creditor. This occurs after all attempts to collect the debt have failed. Bad debt is frequently the result of a debtor declaring bankruptcy or when the expense of chasing the debt exceeds the amount that the creditor might recover. The company will write off this debt as a cost after it has been determined to be bad. The balance sheet account known as Allowance for Bad Debts, Allowance for Doubtful Accounts, or Allowance for Uncollectible Accounts may be referred to as the provision for bad debts. Provision for Bad Debts is a contra asset account in this scenario (an asset account with a credit balance). It’s used in conjunction with Accounts Receivable to provide the accounts receivable’s net realizable value.

Conclusion

Journal is the primary book of accounts. All transactions in a journal are recorded in a chronological order, that is, exactly when they occur. There are various types of special and general journals that are used in accounting. Understanding the differences between various types of entries helps us to understand these entries better.