Journal is a book of original entry in which all business transactions are recorded systematically. Journal means a book which records all monetary transactions on daily basis. A journal is defined as the book of original entry while the definition is more appropriate when the transactions were written in a journal before manually posting them to their respective accounts. There are a variety of journals like the sales journal, purchases journal, cash receipts journal, cash disbursements journal, and general journal.
Features of Journal:
- It is a book of original entry because transactions is recorded at first stage ij this book
- It is known as day book or diary because transactions are recorded in it on day to day basis as and when they take place.
- The journal is only s subsidiary book, subordinate to the ledger which is the principal book of
- The journal gives a complete picture of each business transactions and thus , maintains the identity of the transactions.
- The Journal reflects the relation that exists between two aspects (debit & credit) involved in a transactions.
Functions of Journal:
· Analytical Function:
At the time of recording a transaction in the journal, each transaction is analyzed into the debit aspect and the credit aspect. This helps in understanding how each transaction will affect the business.
· Recording Function:
This is a business language that helps to keep the record of the transactions based on the principles. The recording entry is supported by a brief narration, which explains every transaction in a layman’s language.
· Historical Function:
The Journal book contains a chronological record of the recording of transactions for future references. This will further help the business to analyze their past performance and chalk out their future possibility.
Limitations of Journal :
- As the numbers of transactions in a business are large, journal becomes bulky and voluminous
- Journal does not provide information on prompt basis
- As the journal can only be handled by one person, it does not facilitate the installation of an internal check system
- Cash transactions are usually recorded in a separate book called ‘cash book’. Those transactions are not recorded in journal.