What Does a General Journal Look Like?

A general journal is the initial record-keeping book for a business’s financial activities. It captures every financial transaction in chronological order, serving as the “book of original entry.” This systematic recording maintains a comprehensive history of financial events before information is transferred to other accounting records. The general journal is a foundational element in the double-entry bookkeeping system, which requires every transaction to have at least two affected accounts.

Key Components of a General Journal

A general journal is structured with several columns for recording financial transactions. The first column is for the date, indicating the chronological order of transactions.

The “Account Titles and Explanation” column lists the names of affected accounts and a brief transaction description. The “Post. Ref.” (Posting Reference) column holds the ledger account number after transfer to the general ledger.

The final two columns are for monetary values. The “Debit” column records the amount debited, and the “Credit” column records the amount credited. These columns maintain the balance required by the double-entry system, where total debits must always equal total credits for each transaction.

How Transactions Appear in a General Journal

When a transaction is recorded in a general journal, it follows a specific visual layout to ensure clarity and adherence to accounting principles. The date is entered once for each entry in the date column.

The account being debited is listed first in the “Account Titles and Explanation” column, flush with the left margin. The corresponding debit amount is entered in the “Debit” column on the same line. Immediately below, the account being credited is listed, indented to the right, signifying it as the credit portion of the entry. Its corresponding amount is placed in the “Credit” column.

A concise explanation of the transaction is written on the line below the credit account, also indented. This narration provides context for the entry, detailing the nature of the transaction. The total amount in the “Debit” column must always match the total amount in the “Credit” column for every entry, reflecting the double-entry system’s balancing requirement. A blank line is often left between entries to enhance readability and visually separate distinct transactions.

Examples of General Journal Entries

To illustrate how transactions appear, consider a simple scenario where a business receives cash for services rendered. If a company provides services for $500 cash, the journal entry shows “Cash” debited for $500, followed by an indented “Service Revenue” credited for $500. A brief explanation, such as “To record cash received for services,” is written below.

For a more complex situation, imagine a business purchases supplies on account for $700 but pays $200 in cash. This is a compound entry. “Supplies” is debited for $700. Below it, “Cash” is credited for $200 and “Accounts Payable” credited for $500, both indented. The explanation might state, “To record purchase of supplies, partially paid with cash.” This demonstrates how multiple debits or credits align to maintain the required balance.