general journal
, Defn- A general journal is a company's "book of original entry" where raw financial
transactions are first recorded in chronological order. It details the date, accounts
affected, and the specific debit or credit amounts, ensuring that every entry balances
according to double-entry accounting
Double-entry system - each debit must have an equal and corresponding credit
Format
DR CR
DATE DR [ account to be debited] [element] amount
CR [account to be credited] [element] amount
narration
ASSET = a present economic resource controlled by the entity as a result of past events.
These increase on the debit side and decrease on the credit side. Eg- paying for goods in
cash, you will credit bank and debit inventory.
EQUITY = the owners' claim in the business, also known as Net asset value. These increase
on the credit side and decrease on the debit. Income and capital are recorded on the credit
side, expenses and drawings are recorded on the debit side. Eg- paying salaries creates a
salaries expense, debit equity.
LIABILITIES- a present obligation of the entity to transfer an economic resource. These
increase on the credit side and decrease on the debit side. Eg- taking out a loan creates an
obligation to repay, therefore a credit loan.
EG.
On the first of May, the firm took out a loan from the bank for R500 000. The next day the
firm bought equipment for the firm, R50 000.
DR CR
01/05/26 DR bank [A] 500 000
CR Loan [L] 500 000
Loan taken out by the firm
, Defn- A general journal is a company's "book of original entry" where raw financial
transactions are first recorded in chronological order. It details the date, accounts
affected, and the specific debit or credit amounts, ensuring that every entry balances
according to double-entry accounting
Double-entry system - each debit must have an equal and corresponding credit
Format
DR CR
DATE DR [ account to be debited] [element] amount
CR [account to be credited] [element] amount
narration
ASSET = a present economic resource controlled by the entity as a result of past events.
These increase on the debit side and decrease on the credit side. Eg- paying for goods in
cash, you will credit bank and debit inventory.
EQUITY = the owners' claim in the business, also known as Net asset value. These increase
on the credit side and decrease on the debit. Income and capital are recorded on the credit
side, expenses and drawings are recorded on the debit side. Eg- paying salaries creates a
salaries expense, debit equity.
LIABILITIES- a present obligation of the entity to transfer an economic resource. These
increase on the credit side and decrease on the debit side. Eg- taking out a loan creates an
obligation to repay, therefore a credit loan.
EG.
On the first of May, the firm took out a loan from the bank for R500 000. The next day the
firm bought equipment for the firm, R50 000.
DR CR
01/05/26 DR bank [A] 500 000
CR Loan [L] 500 000
Loan taken out by the firm
