Journal Proper is a term that every accounting student has heard. However lot of them are unsure of what a Journal Proper is and what is its purpose. If you are also looking out for the answer then read along as I discuss the meaning and uses of Journal Proper in this article.
What is a Journal Proper?
Before discussing what a Journal Proper is, let us take a look at how accounting was done a few hundred years back and how it developed from there.
History of development of Book Keeping Process
In the previous stages of Double Entry System of book keeping, there was only one book of original entry which was used for recording each and every transaction. This book was called the Journal.
However, as the process of accounting developed with time, specially classified books were developed for the preliminary recording of different classes of transactions.
These specially classified books were given a distinctive name to indicate the process for which they were used.
For example, separate book was kept for recording
- Credit sales (Known as Sales Day Book or Debtors Ledger)
- Credit purchases (Known as Purchase Day Book or Creditors Ledger)
- Cash/Bank transactions (Known as Cash Book)
- Sales return (Sales Return Book)
- Purchase return (Purchase Return Book)
- Bills Receivable and Payable Book etc.
So as you can see, with the introduction of the specially classified books, the use of the Journal was reduced to a bare minimum.
So where does Journal Proper come into the picture?
The Journal was divided into specially classified books for each category of transactions. However, there remained some transactions which were of unusual nature and could not fit into the classification of the specially classified books.
Thus there was a need for a book of original entry for the unusual transactions.
This is when the Journal Proper came into picture. It is nothing but that same original book of entry but now it records only the residual transactions which cannot be suitably recorded in any other book of original entry.
It is also called the General Journal or simply Journal.
What kind of entries are recorded in the Journal Proper? Uses of Journal Proper
Journal Proper (or the Journal) now records the following entries:
- Opening Entries: Entries passed to open a new set of books either by an entity which is starting a new business. Also used by a continuing business to open new set of books at the beginning of an accounting period.
- Transfer Entries: For transfer of any amount from one account to another.
- Credit purchase and sale of fixed assets.
- Rectification Entries: Entries needed to rectify errors in the books of accounts.
- Adjusting Entries: Entries needed before preparation of final accounts for items like accruals, pre-payments, depreciation etc.
- Closing Entries: Entries needed to transfer the balances of nominal accounts to the Trading and Profit and Loss Account at the end of an accounting period.
- Any other entries of irregular nature for which no special book of original entry is available. E.g. write off of bad debts, allowance to debtors, abnormal losses etc.
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