Each transaction a company makes throughout the year is recorded in its accounting system. There are many different journals that are used to track categories of transactions like the sales journal, all company transaction are recorded in the general journal.
The general journal is the master journal that all company transactions or journal entries are recorded in. A typical general journal has at least five columns: one for the date, account titles, posting reference, debit, and credit columns. Here is the general journal for Blur Guitar, Inc.
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As you can see, each journal entry is recorded with the date and a short description of the transaction. Also, the debits of each transaction are listed before the credits in each transaction. As Blur Guitar, Inc. buys inventory and makes sales throughout the year, it records all of the transactions as journal entries in the general journal. At the end of the year or the end of a reporting period, these transactions are taken from the general journal and posted to individual ledgers. Once the journal entries are posted to the ledgers, the posting reference column can be filled out with the ledger number or abbreviation that the entry was posted to. The ledgers can then be used to make a trial balance and eventually a set of financial statements.
Most bookkeepers don't actually have to manually transfer all the company's transactions from the general journal to the ledgers. Modern accounting software like Quickbooks automatically records and transfers these entries.
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