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Book of Original Entry Definition
A book of original entry refers to an accounting book or journal where all transactions are initially recorded. This book can also be called a first entry or preliminary entry. It is the journal in which invoices, vouchers, cash transactions and others are first recorded before they are transferred to ledger accounts. This is to say that before any details of business transaction can be posted into accounts in a proper ledger, they must first recorded in the book of original entry. All business transactions, their details and descriptions are first recorded in the book of original entry.
A Little More on What is Book of Original Entry
Book of original entry is an accounting journal that carries details and evidence of business transactions before they are posted or transferred into proper ledger. Without the book of original entry being filled with evidence of business transactions, the writing of a ledger cannot be initiated.
As derived from a French word, journal means daily from its root word ‘Jour’ which means day. Daily business transactions where invoice, cash, vouchers and other evidences are used must be recorded in the book of original entry. Transactions involving credits and debits are first recorded in the journal with their descriptions outlined. Essentially, the book of original entry reflect the accounts connected with a business transaction.
Vouchers, invoices, cash and other accounts recorded in a book, list, journal, diary or leaflet are entries. An entry is an act of adequately recording the evidence and details of a business transaction in the appropriate book, it might be a diary or a journal. There are two types of entry, they are;
- Journal Entry
This refers to evidence of business transactions that are recorded in a journal.
- Ledger Entry
Business transactions that are posted or transferred from a journal to a ledger are regarded as ledger entries. There are different accounts in a ledger, each business transaction is posted into the concerned accounts in the ledger.
Every entry carries a description, a brief explanation, this is what is known as narration. A journal entry is regarded incomplete without narrations. Narrations are important for categorizing transactions into appropriate accounts. What a business transaction entails and the nature of the transaction are ascertained through narration. Furthermore, mistakes that occur while recording the evidence of a business transaction are detected and corrected through the narration.
In accounting, there are certain features of a journal. A journal is sometimes called a subsidiary book or assistant ledger. A journal is the first book in which transactions are recorded before they get transferred into accounts in the ledger. A journal contains daily details of business transactions, this means that all transactions for a day are recorded in the journal. Recording of transactions is done in chronological order and narration for each transaction is written beneath it.
Each transaction is also recorded in a journal reflecting the concerned account, whether credit or debit. Each amount is written in the appropriate column designed for it, debits do into debit column and credits into credit column.
Advantages of Journal:
The advantages of a journal are;
- Transactions are recorded daily and at the moment they take place, this reduces the chance for omission of record or transaction.
- Transactions are outlined in a chronological order making it easy for them to be easily ascertained when being transferred into the ledger.
- Each item in a journal has a narration under it, making the easy detection of mistakes in the record possible.
- All the details of a transaction are contained in a journal.
- Debit and credit accounts are included in a journal, this reduce the possibility of mistake when posting them into a ledger.
Format of Journal:
Recording details of business transactions in a journal requires following the adequate process. Every journal has a format which must be followed when inputting daily records. The format of a journal is;
Date Particulars L.F Amount Amount
Account to be debited ………………………..Dr. XXX
Account to be credited XXX
Rules for Journalizing:
The format of a journal basically contains columns reflecting how records in a journal should like. The rules of journalizing can be all understood given the explanation of the columns in a journal. The columns in a journal are there to guide whoever is recording the daily transactions on how to go by it without making any errors or omission. The explanation of different columns is outlined below.
As expected, the date column carries that date which the business transaction occurs. Different date formats are permissible. For example, the date could be written as 30 May 2009, 30/05/2009 or 05.30.2009.
Particulars or Details Column:
In a journal, there are two columns for different accounts, the debit account and the credit account. They often occupy two consecutive columns, the first being the debit account and the latter the credit account. The purpose of these columns is to distinguish between accounts that are credited and accounts that are debited.
The two columns also have two distinct symbols; “Dr” is for the account that is debited while “Cr” symbolizes accounts that are credited.
References for Book of Original Entry
Academic Research on Book of Original Entry
Some variations in accounting practice in England, France, Germany and the United States, Hatfield, H. R. (1966). Journal of Accounting Research, 169-182.
Accounting for rationality: Double-entry bookkeeping and the rhetoric of economic rationality, Carruthers, B. G., & Espeland, W. N. (1991). American journal of sociology, 97(1), 31-69.
Early View on the Origins and Development of Book-keeping and Accounting, Yamey, B. S. (1980). Accounting and Business Research, 10(sup1), 81-92.
Early developments in american auditing, Moyer, C. A. (1951). The Accounting Review, 26(1), 3-8.
Paciolo-Patriarch of accounting, Langer, C. (1958). The Accounting Review, 33(3), 482-484.
The evolution of the journal entry, Littleton, A. C. (1928). Accounting Review, 383-396.
Financial Accounting, Shah, P. (2013). OUP Catalogue.
Double entry versus charge and discharge accounting in eighteenth-century France, Lemarchand, Y. (1994). Accounting, Business & Financial History, 4(1), 119-145.
Accounting for the estates of deceased travellers: an example of early Spanish double entry bookkeeping, Anes, R. D. (2002). Accounting History, 7(1), 79-99.
No one stands still in public accounting, Dennis, A. (2000). Journal of Accountancy, 189(6), 66.