For some people, especially those working in the world of accounting, they must be familiar with general journals. General journals have an important role in accounting and financial calculations when starting a business.
Therefore, this important value is the basis for you to know briefly what a general journal is, along with other things, including examples of the general journal itself.
In general, the term journal itself is often used or referred to when first recording a transaction. And what is certain is that the continuation of the general journal from this stage to becoming a financial report cannot be left behind.
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Where this general journal will later become a means of recording expenditure and income transactions as well as being used as material for analyzing business development.
Therefore, it is necessary to know what examples of general journals are like so that you as a beginner can take steps to immediately start making general journals.
Therefore, it is important to record financial transactions in a general journal which will be explained as an example of a general journal below later.
It is important to do it within a certain period otherwise it can have fatal consequences such as the occurrence of criminal acts, corruption which will lead to the bankruptcy of the company.
What is a General Journal?
Ideally, both small and large businesses must have heard of the term general journal, right? Before moving on to examples of general journals, it’s a good idea to know in advance what a general journal actually is so that when making a general journal it can be made easier.
Reporting from various sources, examples of general journals will provide an understanding of general journals, namely a journal that is used to record all types of financial transaction evidence that exists from all financial transactions of a company within a certain period.
Etymologically it can be said that this journal comes from the French word Jour which means day. Thus, this general journal is often used to record financial transactions chronologically according to the date of the transaction, the account group or the nominal value in the debit and credit columns.
Usually this general journal is used in companies engaged in the service sector. The reason is because all financial transactions in service companies can be recorded chronologically.
As for trading companies, instead of using general journals, they tend to use special journals as a place to record transactions.
This is different from general journals such as the general journal example below, recording transactions in special journals can be done by grouping each transaction according to its type, transactions that are repeated or transactions that are carried out within a certain period.
A trading company certainly needs a recording model such as a special journal, so that the company can find out all types of high-intensity transactions at a certain time.
So, it can be concluded that the general journal is a journal that is used to record all financial transactions that exist in a certain period to facilitate subsequent financial management for both internal and external parties of the company.
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Purpose of Making a General Journal
After understanding the meaning of a general journal, before moving on to examples of general journals, it’s a good idea to know the purpose of making a general journal itself. With this general journal, you can identify and do things related to financial transactions.
Apart from that, of course there are several other purposes for making a general journal including the following to understand the example of a general journal below later:
- Identify all transactions that occur in a company or business.
- To conduct an assessment of the company’s financial performance within a certain time.
- General journal entries will also have an economic impact on transactions within the company.
- The general journal also aims to facilitate the process of transferring financial transactions that occur into an account according to each transaction.
Benefits of Making General Journals for Companies
Recording of financial transactions with the continuation of the general journal will also provide benefits that can be felt by a company, apart from the purpose of making it.
So, it’s better before proceeding to the general journal example to know in advance how the benefits can be felt when making a general journal.
Following are some of the benefits of general journals for companies or businesses, so that it will make it easier for you to understand the general journal examples below later.
- General journals are used as a place to provide accurate records of all financial transactions that occur.
- General journals are used as a medium for balancing bookkeeping.
- General journals are used as a tool to provide income and expense reports in real time.
- General journals are used as a tool to organize data on receipts and expenditures at a certain time in order to facilitate the delivery of tax reports .
- The general journal can also be used to prepare transaction data for a company’s financial audit.
- General journals can also be used to access loans for business credit that will be submitted.
- General journals are used to see patterns of expenditure and receipts.
- General journal as a place to collect important information to document a financial transaction.
- In addition, general journals can also be used to assess a company’s financial health.
People who own a business or company should not underestimate the importance of examples of general journals if they want their business to grow healthily. Because, notes in journals that contain these transactions are very useful for consideration in determining future business steps.
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Basic Principles of General Journal Making
Furthermore, in accounting, there are certainly some basic principles that must be considered when making examples of general journals. Therefore, it is better to know these basic principles in advance to be able to proceed to the general journal example stage. This is one of the principles that must exist in making a general journal.
- First, the basic principles for the process of identifying evidence of financial transactions that exist in a company. Evidence of these transactions such as receipts, notes, memos and so forth.
- Second, the basic principle in determining accounts that are affected by transactions that have occurred and classifying them into types of accounts such as assets, capital or debt.
- Third, the basic principle in determining whether there is an addition or reduction to the account related to the transaction.
- Fourth, the basic principle in making a decision whether to debit or credit the account related to the transaction.
- Finally, the basic principle when recording transactions in the general journal is based on evidence of existing transactions.
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General Journal Making Function
In fact, a general journal has an important function which is divided into 5 apart from its benefits and purposes. The important function of making general journals, especially for service companies, includes the following as well as to understand the examples of general journals below later.
1. Historical Function
This function explains that general journals are carried out chronologically so all forms of transactions will be recorded by date and applied in daily life. Not only that, the general journal will then describe the company’s activities every day sequentially and continuously.
This is the reason why the general journal has a historical function, where there is a record of recording transactions systematically and makes it easier to check if an error occurs and so on.
2. Recording Function
All transactions that occur in the company must be recorded in the general journal. That is, there will be changes that occur such as capital, costs, income, and so on which will be recorded first in the general journal. After that, it will be used as material in the preparation of financial statements at the end of a certain period.
3. Function Analysis
As with other journals, input made in general journals should not be arbitrary or random. Where each record or transaction record in the general journal is the result of an analysis of a transaction.
Transactions will be identified as debits and credits which will then be classified according to the account, and the value of the transaction. Thus, the general journal can be entered and meets the requirements for the analysis function.
4. Instruction Function
Not only do they record historically, but the general journal also makes the data input process in the ledger. Simply put, recording in this type of general journal will not only stop at transaction documents, but also in the form of debit and credit instructions.
5. Informative Function
It is easy to see that the general journal contains a large amount of detailed information with respect to evidence of recording transactions that have occurred. Therefore, general journals will provide relevant information while facilitating internal and external parties in managing finances.
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How to Make a General Journal
Enter the stage of how to make a general journal before moving on to the example of a general journal. If you are really interested in learning about general journals, then there are a number of things you need to know so that you can record financial transactions with maximum results plus see examples of general journals later.
Here are some things you need to know in making general journals, including the following.
1. Understand the Accounting Equation
It is a must and obligation to understand the accounting equation. By understanding the accounting equation, you will be able to identify how to enter transactions into the journal. This includes determining the account used to determine the debit and credit sides for transactions that are currently taking place.
Because if you don’t understand this accounting equation well, then you will experience difficulties in recording transactions in the journal. An understanding of these accounting transactions will help you find out how to make a general journal according to the general journal example below.
To increase knowledge, here’s the basic equation in accounting:
Assets = Liability + Capital
With the following description:
Assets = Debt + Capital + (Income – Expenses)
Understanding the basic accounting will make it easier for you to group accounts in recording transactions. Through accounting applications , you can easily and automatically make accounting journals without the need to understand the accounting equation in depth.
An example of a simple general journal will be presented below, raw material inventory is categorized in the asset group. Likewise, the existence of trade receivables can be categorized into assets.
In addition to the basic accounting equation, to make it easier to make accounting journals like the examples of accounting journals below, you must understand the normal balance of each account in the general journal. These normal accounts usually total 5 accounts, and this is the normal balance.
- Assets (properties or assets) will increase in debit and decrease in credit with a normal balance in debit.
- Debt ( liability) will increase in Credit and decrease in Debt with a normal balance in Credit.
- Capital will increase in Credit and decrease in Debt with a normal balance in Credit.
- Income will increase in Credit and decrease in Debit with a normal balance in Credit.
- Expenses will increase in Debit and decrease in Credit with a normal balance in Debit.
In short, it can be interpreted as follows where when assets, namely assets or assets increase, you can record them on the debit side. Meanwhile, if the asset is reduced, you will record it on the credit side. Meanwhile, the normal balance of this asset account is the debit side. It’s like that for the other four accounts too.
In more detail, to add to your understanding of accounts in accounting, here are some accounts that you need to know when you know examples of general journals.
- Assets are all resources owned by the company and of course generate value. Assets include cash, tools, equipment, property, trademarks and so on.
- Liabilities are debts, the debts in question are current or future financial debts that must be paid by companies that have debts. Such as bank loans, rent and so forth.
- Equity or also known as capital is wealth calculated from the difference between the value of assets and liabilities. Usually this equity includes things such as paid-in capital, donated capital, shares and so on depending on whether the company is private or public.
Unlike the accounts above, this is an important thing you need to know when studying a general journal in accounting.
- Income is a business income that will be obtained from the sale of products or services that are marketed. For example, such as sales, royalties, interest and others which are income or income for the company.
- Expenses are expenses that must be paid to obtain certain services or products, such as salaries, rent, meals and so on.
2. Collecting and Identifying Evidence of Transactions
After you have successfully understood the accounting equation well, the next step you need to know to make a general journal like the example below is to collect proof of transactions.
Proof of the transaction is later used as the basis for recording transactions in the journal. You don’t only need to collect it, but also analyze and identify it according to the transactions that occur. You can find proof of this transaction such as notes, invoices , receipts and so on.
During the identification process, you must repeatedly ensure that only transactions that can change financial position are recorded in the general journal where every transaction has at least 2 accounts that will affect it, meaning that not all transactions that occur can be entered in the general journal.
3. General Journal Recording
The final step is to enter the general journal recording to make a general journal like the general journal example below later. You can start journaling using a double – entry system. This system will record every transaction that has an impact on his financial position, namely debits and credits in the same amount.
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General Journal Example Case
An example of a general journal loaded with cases, where this example uses data from Sinar Company transactions which have collected all transactions that occurred in January 2023.
Jan 5 : The company purchased merchandise on account from Jaya Company in the amount of Rp. 140,000,000,- with terminal 2/10, n/30.
Jan 8 : The company purchases office supplies for IDR 50,000,000 in cash.
Jan 15 : The company paid all debts to Jaya Company for the purchase of merchandise made on June 1.
Jan 20 : The company sells merchandise in cash for IDR 100,000,000
Jan 23 : The company pays business operational bills in the form of electricity, water and internet in the amount of IDR 5,000,000
That is a complete explanation along with examples of general accounting journals. If you have difficulty making general journals manually, you can try using products from accounting company that provide this product.