Characteristics of Journal Entry

Characteristics of Journal Entry

In this article we would explain some basic characteristics of journal entry. Transactions are recorded with the help of journal entry. This is the first processing of financial transaction.

Important Characteristics of Journal entry

Some important characteristics of journal entry have been explained below

1.   First Processing

Journal entry is first processing or recording of financial transaction. Thus journal entry has fundamental importance in book keeping or accounting.

2.   Dual Aspects Recording

Journal entry must follow the dual aspect of recording the Financial transaction. It means that each transaction would have debit and credit and debit aspect of the financial transaction must be equal to credit aspect. 

3.   Explain Transaction

Journal entry explains the financial transaction both in terms of debit & credit rules and also with the help of narration. These rules have been explains in my other article. Narration is a brief description of transaction.

4.   Recording with Standard Rules

Journal entry is recorded with the help of standard rules of debit & credit.

5.   Recording in Journal

Journal entry is recorded in Journal. This is a book which is used for recording journal entries is called journal. The entries are entered in chronological order.

6.   Simple & Compound Journal Entry

In simple entry one head of account is debited or credited and another is debited or credited with same amount, however, in compound entry against there may be more than one debit or credit for a single debit or credit.

Compound entry is basically recording two or more entries at once. Cash received & discount allowed is a typical example of compound entry. This has been explained below

Compound entry Example

Cash received from creditor $30,000 and discount allowed $ 10,000.

Date	Particular	Folio	Dr.	Cr.
21.08.2016	Cash		40,000
21.08.2016	Discount			10,000
21.08.2016	Creditor			30,000

7.   List of Characteristics of Journal entry

Some important characteristics of journal entry are listed below

a)    It records the transaction with help of debit & credit rules.

b)   Journal entry also uses narration for transaction.

c)    Entry is recorded in journal.

d)   Journal entry reflects the transaction details.

e)