Page 32 - DEBK-XI(2020)

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C H A P T E R

Journal

MEANING OF KEY TERMS USED IN THE CHAPTER

1. Journal It is the primary book of account in which transactions are first recorded
in a chronological order, i.e., in the order they are entered into.
2. Book of Original It is the book in which a transaction is first recorded, i.e., Journal book.
Entry
3. Bad Debts It is the amount which is not recoverable and hence, written off.
4. Bad Debts It is the amount which was earlier written off as Bad Debt and is later
Recovered recovered, in full or in part.
5. Discount
• Trade Discount It is a discount allowed to the purchaser of goods when goods are
purchased in large quantity.
• Cash Discount It is a discount allowed on receipt of amount promptly, i.e., within the
agreed time.
• Rebate Rebate is the discount allowed for reasons other than those for which trade
discount and cash discount are allowed. For example, rebate allowed for
poor quality of goods, goods being not as per specification, etc.
6. Simple Journal It is a Journal entry in which one account is debited and another
Entry account is credited.
7. Compound Journal It is a Journal entry in which one or more accounts are debited and/or
Entry credited.
8. Opening Entry It is the first entry passed in the Journal book incorporating the closing
balances of previous year.
9. Goods and Services Goods and Services Tax (GST) is a comprehensive indirect tax charged
Tax (GST) each time the supply is made, i.e., each time the goods are sold and/
or services are rendered, except on the exempt goods and services.

CHAPTER SUMMARY

• Journal is the primary book of account in which transactions are first recorded in a
chronological (day-to-day) order.
• Journal is a book of original entry because a transaction is first entered in the Journal from
where it is posted to the Ledger.
• Journal entry may be (i) Simple Journal Entry; or (ii) Compound Journal Entry.
(i) Simple Journal Entry is a Journal entry in which one account is debited and another
account is credited.
(ii) Compound Journal Entry is a Journal entry, which involves more than two accounts.
It means it is an entry in which one or more than one accounts are debited
and/or credited.