Procedure of Journalising

The following procedure is followed for passing journal entries-

– Analyze each transaction in terms of accounts affected. As a rule every transaction has at least two accounts.

– Find out the type of accounts affected in a transaction i.e. personal, real or nominal.

– Apply the rules of debit and credit to each type of accounts involved.

– The debit and credit accounts must be equal. Sometimes, a journal entry may have more than one debit or/and more than one credit. This type of journal entry is called compound journal entry.

Regardless of the number of debits or credits in a compound journal entry, the aggregate amount of debits should be equal to the aggregate amount of credits.

– For a business, journal entries generally extend to several pages, hence, totals of debit and credit amount columns are cast at the end of each page. Against the debit and credit total at the end of a page, the words, ‘Total c/f’ (c/f – indicates carried forward) are written in the particulars column. The debit and credit totals are then written in the beginning of the next page in the amount columns and against them the words ‘Total b/f’ (b/f – indicates brought forward) are written in the particulars column. On the last page ‘Grand Total’ is written.