Books of original entries
Books of original entries are books in which we first record the transactions. We record entries in them according to the nature of transactions and entries are made to them on daily basis
In the course of business, source documents (For example invoices, credit notes and debit notes etc..) are created. The details of these source documents need to be summarized, as otherwise the business may forget to make payment or ask for payment of cash or even accidentally pay twice. In other words business needs the record of source documents of transactions to track what's going on. These kinds of records are made in books of original entries
There are many books of original entries used to record financial activities of a business and transactions are recorded in them according to the nature of transactions
General journal is also referred to as Day book or Book of original entries. General journal is the place where a business first records the transactions. General journal is most commonly used to record general economic events or transactions of an enterprise
The process of recoding business transaction in a journal
The Standard format of a General Journal is given below:
Date column:
Date column is used to record the date on which a transaction occurs
Description column:
The name of accounts and concise explanation of a transaction is entered in Description column.
Post reference or Folio:
This column is completed when posting are made into ledger accounts
Debit and Credit:
The amounts to be debited or credited is entered in these columns
How to debit and credit
There are five types of accounts: Assets, Expenses/Loses, Liabilities, Incomes/Gains and Capital
We debit an Account when there is:
We Credit an Account when there is:
EXAMPLE No.1 Simple Double entries

Paid rent for factory building $50,0000
Since Business has
incurred Rent expense or we can say that there is an increase
in expenses and for that business is now paying cash or there is a
decrease in business's cash and therefore we debited rent expense and
credited cash
Paid cash to Mr.Z and Co. $200 for goods purchased on credit
Firm had purchased goods on credit or increased its liabilities and it's business responsibility to repay the creditor which the firm did on the 5th December. As a result there is a decrease in cash (Asset) and decrease in creditor (liability). Therefore, creditor is debited and cash is credited.
Paid cash $500 for telephone bills
Because the firm is paying its telephone bills and as we know telephone bills is a expense. Therefore, there is an increase in expenses and a decrease in cash as a result bills expenses are debited and cash is credited.
Commission $1000 received for selling goods of G man
The firm is getting or recognizing commission (Income) or there is an increase in income which is always credited and firm is getting commission in the form cash. So, there is an increase in cash which is debited
Books of original entries are books in which we first record the transactions. We record entries in them according to the nature of transactions and entries are made to them on daily basis
Need for Books of original entries
In the course of business, source documents (For example invoices, credit notes and debit notes etc..) are created. The details of these source documents need to be summarized, as otherwise the business may forget to make payment or ask for payment of cash or even accidentally pay twice. In other words business needs the record of source documents of transactions to track what's going on. These kinds of records are made in books of original entries
What are the kinds of Books of original entries?
There are many books of original entries used to record financial activities of a business and transactions are recorded in them according to the nature of transactions
- General journal or Day book - For recording general double entries
- Sales Journal or Sales day book - For recording credit sales
- Purchase journal or purchase day book - For recording purchases on credit
- Sales return journal or sale return day book - For recording sales return
- Purchase return journal or purchase return day book - For recording purchases return
- Cash receipts journal - For recording all kind of cash receipts
- Cash payments journal - For recording all kind of cash payments
- Cash book - For recording cash receipts and payments
The term Journal is also known as day book.
Now we are in position to discuss our first book of original entries The General journal.
General Journal
General journal is also referred to as Day book or Book of original entries. General journal is the place where a business first records the transactions. General journal is most commonly used to record general economic events or transactions of an enterprise
Journalizing
The process of recoding business transaction in a journal
The Standard format of a General Journal is given below:
DATE | DESCRIPTION | FOLIO | DEBIT | CREDIT |
Date column:
Date column is used to record the date on which a transaction occurs
Description column:
The name of accounts and concise explanation of a transaction is entered in Description column.
Post reference or Folio:
This column is completed when posting are made into ledger accounts
Debit and Credit:
The amounts to be debited or credited is entered in these columns
How to debit and credit
There are five types of accounts: Assets, Expenses/Loses, Liabilities, Incomes/Gains and Capital
We debit an Account when there is:
- Increase in Assets for example increasing in debtors, goods, notes receivable, Building, machinery etc
- Increase in Expenses for example increase in rent, salaries, depreciation expenses etc
- Decrease in Liabilities for example decrease in Creditor, bills payable, bank loan, bonds payable etc
- Decrease in Incomes for example decrease in sales, commission, dividend, discount received etc
- Decrease in Capital for example decrease in owner equity, share capital etc
We Credit an Account when there is:
- Increase in Assets for example increasing in debtors, goods, notes receivable, Building, machinery etc
- Increase in Expenses for example increase in rent, salaries, depreciation expenses etc
- Decrease in Liabilities for example decrease in Creditor, bills payable, bank loan, bonds payable etc
- Decrease in Incomes for example decrease in sales, commission, dividend, discount received etc
- Decrease in Capital for example decrease in owner equity, share capital etc
EXAMPLE No.1 Simple Double entries
December 3. | Paid rent for factory building $50,0000 |
December 5. | Paid cash to Mr.Z and Co. $200 for goods purchased on credit |
December 7. | Paid cash $500 for telephone bills |
December 20. | Commission $1000 received for selling goods of G man |

DATE | DESCRIPTION | FOLIO | DEBIT | CREDIT |
Dec. 3 | Rent expenses Cash | $50,000 | $50,000 | |
Dec. 5 | Creditor (Mr. Z an Co.) Cash | $200 | $200 | |
Dec. 7 | Telephone expenses Cash | $500 | $500 | |
Dec. 20 | Cash Commisssion income | $1000 | $1000 |
Explanation (It is not the part of Journal or double entries)
Paid rent for factory building $50,0000
Paid cash to Mr.Z and Co. $200 for goods purchased on credit
Firm had purchased goods on credit or increased its liabilities and it's business responsibility to repay the creditor which the firm did on the 5th December. As a result there is a decrease in cash (Asset) and decrease in creditor (liability). Therefore, creditor is debited and cash is credited.
Paid cash $500 for telephone bills
Because the firm is paying its telephone bills and as we know telephone bills is a expense. Therefore, there is an increase in expenses and a decrease in cash as a result bills expenses are debited and cash is credited.
Commission $1000 received for selling goods of G man
The firm is getting or recognizing commission (Income) or there is an increase in income which is always credited and firm is getting commission in the form cash. So, there is an increase in cash which is debited
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