1. What is a Journal?

A journal is a book of original entry. As transactions occur they are recorded first in the journal. For this reason, journal is called to book of original entry. The entire transaction, both the debit and credit is recorded in one place on one page.

2. What are the functions of a journal?

Journal has two functions.
       1. To analyze each transaction into debit and credit so as to simplify their transfer into ledger.
       2. To arrange transactions chronologically i.e. in order of date.

3. Explain the definition of Journal?

According to Carter, " The journal or daily record as originally used, is a book of prime entry in which transactions are copied in order of date from a memorandum or waste book. The entries as they copied, are classified into debits and credits, so as to facilitate there being correctly posted afterwards in the ledger".

4. Explain the necessity of Journal?

Although it is possible to record transaction directly in the proper accounts in the ledger, such a procedure will, however, be cumbersome and confusing if there are many transactions. Besides, it will become really difficult to locate a transaction after several recordings. In order to facilitate availability of information to locate errors in recording and to provide chronological record of transactions, it is necessary to use journal.

5. Explain about ledger folio?

The transactions entered in the journal are later on posted to the ledger, Ledger is usually made of sheets of paper folded at the middle and divided into pages, each of which is called a folio. For ready reference, each page of ledger is serially numbered and each account is allotted at least one page. This Column  is used to note the page numbers of ledger in which the concerned accounts have been posted.

6. Explain about Narration?

Every journal entry is followed by a short description or explanation of the transaction. This is called the narration. An entry is incomplete without narration. Thus, narration is an essential part of entry. The function of narration is - given a very brief statement of the facts which are recorded. Thus the entry is made self - explanatory which will facilitate future reference.

7. What do you mean by Goods?

Goods mean the things which are bought for the purpose of resale at a profit. In other words, commodities in which a businessman deals are known as goods for him.

8. What do you mean by purchase account?

This account is meant for recording all purchases of goods when goods are purchased, the purchase account should  be debited instead of goods account.

9. What do you mean by sales account?

This account is meant for recording the sale of goods. The goods 'go out' on sale of goods, therefore, the sales account should be debited instead of goods account.

10. Explain what do you mean by purchase return account?

This account is meant for recording returns of goods purchased. The goods ' go out' on returning of goods to the suppliers, therefore, the account should be credited on returning goods purchased.

11. Explain what do you mean by sales return accounts?

The account is meant for recording of returns of goods sold by the customers. The goods ' come in' and, therefore, the sales returns account should be debited on return of goods sold instead of goods account.

12. Explain about casting and carry forward?

Journal entries generally extend to several pages, hence totals of amount columns are cast at the end of each page. Against the debit and credit total at the end of a page, the words 'C/F' (carried forward) are written in the particulars column. The debit and credit totals are then written in the beginning of the next page in the amount columns and against them the word 'B/F' (brought forward) are written in the particulars column. On the last page 'Grand Total' is cast. These totals would be equal because the debit column contains as much as the credit column. This work is known as casting.

13. Explain what is capital Account?

In term of one of the basic concepts of accounting- the business entity concept - the owner and his business are regarded as separate entities. Because of this, distinction between the owner and the business, it is necessary to open an account for the owner in the firm's books. By convention, this is called the capital account.

14. Explain what is Drawings?

An cash or goods taken by the owner for personal use or any private payments made out of  business funds are known as drawings.

15. Explain what is Drawings Account?

Drawings account, like the capital account, is an account of the proprietor. It serves as a supplement to the capital account. All drawings must be accounted for and this is done by debiting a separate drawings account.

16. Explain what do you mean by Discount?

Discount means amount due to be received or paid after deducting some amount. For example, you go to market for purchasing a book. The printed price of the book is  Rs. 100. If the trader charges Rs. 90 after deducting 10%  on printed price, the deduction of Rs. 10 is known as discount.

17. Explain what is Trade Discount.

It is a deduction made without any conditions, in favor of persons engaged in the same trade. Its uses carries the double advantages of enabling retailers to sell at the 'list price' and at the same time to make a profit, while the wholesaler finds it obviously more convenient, when prices change, to alter the rate of trade discount than to undertake extensive reprinting. For accounting purposes, trade discount is not recorded in the books at all, the price of the goods being always recorded in the books of both the parties at the net figure.

18. Explain what is cash discount?

In order to encourage purchasers to settle their accounts as early as possible, sellers usually offer to deduct a small percentage from the price of goods on condition that payment is made within a specified time. Such a deduction is termed as cash discount.

19. What do you mean by compound journal entry?

If there are two or more transactions of similar nature occurring on the same day and either Dr. or. Cr. amount is common, such transactions can be conveniently recorded in the form of one journal entry instead of making a separate entry for each transaction. Such entry is known as ' compound journal entry'.

20. What do you mean by Opening Entry?

In case of existing business, the previous years’ balances of assets and liabilities will have to be brought forward to the current year's new books of accounts. This is done by means of a journal entry which is termed as 'Opening entry'.

21. What do you mean by Bad debts?

When credit sales are made, the customers become debtors. By bad debts, we mean those dues from debtors which cannot be realized or of which there is no possibility of being realized because of debtor's death insolvency or other reason. For this, a special account is opened namely 'Bad Debts Account'.

22. What do you mean by Ledger?

Journal is a book of original entry where as the ledger is a book of second entry. It is also known as book of final entry because the transactions which are first entered in journal, are finally incorporated in the ledger.

23. What is the definition of Ledger?

According to L.C. Cropper, "The book which contains a classified and permanent record of all the transactions of a business is called the ledger".

24. What are the Functions of ledger?

The main function of a ledger is to classify all the times  appearing in the journal under their appropriate accounts so that each account will contain the entire information of all the transactions relating to it in a summarized form at the end of the accounting period. In other words, it is the function of the ledger to show under each account heading all positive and negative changes pertaining to that account as a result of operations to date and the balance of the account, if any, at the end of significant period.

25. What do you mean by posting?

The record of transaction in the journal is called entry while the process of transferring an entry from the journal into the ledger is called 'Posting'. The term 'Posting' means transferring the debit and credit items from the journal to their respective accounts in the ledger. It may be done either daily or periodically viz, weekly, fortnightly or monthly according to the convenience and requirement of the business.

26. What do you mean by Balancing of an Account?

The amount by which the entries on one side of an account exceed the entries on the other side of the account is termed as the balance. Balancing an account means calculating the balance on an account.

27. What do you mean by opening entry?

In the beginning of every accounting period, a journal entry is passed to record the opening balances of all the assets and liabilities. This entry is called 'Opening entry'.

28. What are the Advantages of ledger?

1. Knowledge of net result
2. Helpful in preparing trail balance.
3. Helpful in preparing final accounts.
4. Knowledge of financial position.