Video Transcript: The Journal

Hello and welcome back now we discuss the journal in explaining the rules of  debit and credit, we recorded transactions directly into the accounts. Each  ledger, general or general ledger account shows only the increases in debits in  that account, thus all the effects of a single business transaction would not  appear in any one account. For example, the cash account contains only data  on changes in the cash and does not show up how the cash was generated or  how it was spent. To have a permanent record of the entire transaction, the  accountant use the book that is known as the journal. A journal is a  chronological record of business transactions. A journal entry is recording of a  business transaction in that in a particular journal. A journal entry shows all the  effects of a business transaction as expressed in debits and credits, and may  include an explanation of that transaction. A transaction is entered into a journal  before it is entered into the ledger, because each transaction is initially recorded  in a journal rather than directly in the ledger, a journal is called a book of original entry a business usually has more than one journal. Earlier, we briefly discussed several specific journals in this in this unit, we use the basic form of journal, the  general journal, as shown in Exhibit eight. A General, General Journal contains  the following column in the previous demonstrations we showed you on a  worksheet, you had the assets, liabilities and stockholder equity, or owner  equity. Now this is the whole process. You have your input from your processing  to your output. Okay, so the number one you're going to analyze the transaction. Is it a recordable transaction, or is it not? And if it is, you're going to journalize  that. And when I say journal is you now you're going to see the chronological  order from the first of the month to the end of the month. Instead of on a  worksheet, you're going to see it in a journal. Okay? From there, you're going to  post those entries into the general ledger, which are your accounts, okay, your  assets, so you have cash, account receivable, then your liabilities, notes,  payables, accounts payable, your retained earnings, for your equity, okay, your  revenue account, your expense account, those are all under the General Ledger in separate accounts. Okay, from there you are going to prepare a trial balance,  which we've not talked about yet, which we will and from there, you may or may  not have adjusting entries. And once you have prepared your adjusting entries, if you have any, you're going to have a post closing, trial balance, and then from  there, after the post closing, you're going to create your financial statement.  Okay? Now this here is the journal, okay? So as you can see, we have a date,  we have account titles and explanation. You have a posting reference and you  have a debit and a credit. Okay, so let's go on. Okay, so in the date column,  which is here, okay, the first column of the journal page is for the date. For the  first journal entry on a page, the column contains the year, okay, so as you can  see, you're going to write 2010 November, 28 okay, but the next entries, you will  not need the year, just the month and the day, okay. The account title is an  explanation column. The first line of the entry shows the account debited. You 

always start with your debited account first, and then your credit account with a  little indention. As you can see, you have your cash account first, which is your  debit account, and then your capital your credit account is the next one. Okay.  

The second line shows the account credited, notice that we indent the credit  account to the right. Okay, so this here, where it says capital sock, you will  indent that just a little bit to to demonstrate that it isn't a credit. Okay, any  necessary explanation for the transaction appears on the next line, okay, a  journal entry explanation should be concise and yet complete enough to  describe fully the transaction and prove the entry's accuracy. When a journal  entry is self explanatory, we omit the explanation. The posting reference column, which you can see right after the account title and explanation. This column  shows the account number of the debited or credited account. So on your  general journal, you are the general ledger. You have your all your accounts,  and each one of those are numbered. And we'll go through the numbering  system short in a little bit. Okay, so. For instance, all your assets, they start with  100 okay, no number appears in the column until the information has been  posted to the appropriate general ledger account. The debit column is the  amount of the debit is on the same line as the title of the account debited. The  Credit column that amount is also the same line as the title of the credited  account. A summary of the functions and advanced advantages of using the  journal is as follows. It records transactions in a chronological order. It shows the analysis of each transaction in debits and credits. Supplies an explanation of  each transaction when necessary, serves as a source for future reference to  accounting transactions. Eliminates the need for lengthy explanations from the  accounts. Makes possible posting to the ledger at convenient times. It assists in  maintaining the ledger in balance because the debits must always equal the  credits in each journal entry. It also aids in tracing errors when the ledger is not  in balance.