Table of Contents
What is Journalising?
The Procedure of Recording Transactions in the journal is called Journalising. Before a transaction is recorded in the journal, it is essential to analyse the transactions and decide the account should be debited and credited.The Journalising Includes.
Analysis of Transactions :
Analysis Involves Find out the Nature of transaction and its effect in business.
Example 1 : On 01-06-2016 Cash sales to Mr .X. $2000
Analysis: Cash (asset) and Sales ( income) increased
Example 2: On 02-06-2016 Credit Purchase from XYZ Trading $ 5000
Analysis:Expense Increased ( Purchase)and Liability Increased ( XYZ ) Stock Increased.
Recording in the Journal based on Journalising Rule or the Golden Rule of Accounting.
Based on the analysis, Find out the affected ledgers.
Example 1: Affected Ledgers are Cash & Sales
Cash is Real Account -Apply Rule- Debit What Comes In
Sale is a Nominal Account- Apply Rule – Credit All Incomes or gain.
Debit Aspect is – Cash
Credit Aspect is- Sales
Example 2: Affected Ledgers are Purchase & XYZ Trading.
Purchase is a Nominal Account – Apply Rule – Debit all Expense
XYZ Trading is a Personal Account -Apply Rule -Credit the Giver.
Debit Aspect is – Purchase.
Credit Aspect is- Sales.
The Recorded Journals are as follows.