A journal is the original book in which business transactions are first entered. Each individual record in this book is called an entry. The journal is also known as a book of original entry because the transactions are transferred from the journal into other accounting books (such as ledgers).

1. It provides a chronological record of all business transactions in one place.


2. It allows for the proper classification of transactions before they are posted to the ledger.


3. It helps in ensuring that every transaction is entered exactly once (in the journal) with correct details.


4. It serves as a basis to detect errors and omissions before posting to other books.

There are two major types of journals:

1. General Journal (sometimes called Journal Proper)

This is used to record transactions that do not fit into any of the specialised journals. It deals with both cash and credit transactions when no special journal is available.

Example: Recording depreciation, correction of errors, adjusting entries.

2. Special Journals

These are books created to record only one type of transaction in large volume, thereby reducing work and making posting easier.

Common special journals include:

1. Purchases Journal (or Purchase Day Book): records all credit purchases of goods for resale.


2. Sales Journal (or Sales Day Book): records all credit sales of goods.


3. Cash Receipts Journal: records all cash or cash-equivalent receipts.


4. Cash Payments Journal (or Cash Disbursements Journal): records all cash payments.


5. Purchase Returns Journal (or Returns Outward): records goods returned to suppliers (credit purchases returned).


6. Sales Returns Journal (or Returns Inward): records goods returned by customers (credit sales returned).

Typically, the journal has columns arranged to record essential details of each transaction:

1. Date (when the transaction occurred)


2. Particulars (name of account(s) to be debited and credited, description)


3. Folio (reference number from ledger or book of original entry)


4. Invoice Number (if applicable)


5. Debit amount


6. Credit amount

A typical heading might look like:

        Date | Particulars | Folio | Invoice No. | Debit (₦) | Credit (₦)
        

1. Identify the transaction and obtain the source document (e.g., invoice, receipt).


2. Analyse the transaction to determine which accounts are involved and whether they are to be debited or credited.


3. Record the transaction in the appropriate journal (special or general).


4. Post the journal entry to the ledger accounts, noting the folio/reference.


5. In the case of special journals, total the columns periodically (e.g., at the end of the month) and post the totals to the ledger.

1. Ensures that transactions are recorded in the correct order and that details are preserved.


2. Simplifies the posting process to ledgers because each entry in a special journal covers many similar transactions.


3. Helps in control and verification of transactions with the use of invoice numbers and folios.


4. Reduces duplication of work and errors by grouping similar transactions.


5. Enables accurate preparation of financial statements since ledger balances will be based on properly posted entries.

Suppose a business, on 10 November 2025, purchased goods on credit from XYZ Suppliers with invoice No. INV/2025/010 for ₦200,000. The journal entry would look like:

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Example 1: Payment of Rent and Electricity Bill

Illustration:
On 15th November 2025, a business paid ₦50,000 for rent and ₦30,000 for electricity bill in cash.

Journal Entry:

Explanation:
Both rent and electricity are expenses, so they are debited.
Cash is credited because money is going out of the business.
This is called a compound journal entry because it involves more than one debit and a single credit.

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Example 2: Purchase of Office Equipment on Credit

Illustration:
On 20th November 2025, the business purchased office equipment worth ₦120,000 on credit from Bright Tech Supplies Ltd.

Journal Entry:

Explanation:
Since the business acquired office equipment, which is an asset, the Office Equipment Account is debited.
Because payment was not made immediately, the creditor’s account (Bright Tech Supplies Ltd) is credited.
This is a simple journal entry (one debit, one credit).

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After this, the entry would be posted to the respective ledger accounts.

Key Points to Remember

1. A journal is the first place where transactions are recorded.


2. Special journals are created for ease, but all transactions too unusual or infrequent go into the general journal.


3. The journal is sometimes called the book of original entry.


4. Proper use of invoices, folios, and correct debits/credits in the journal is essential for accurate bookkeeping.