-Pushpender Kumar Academic Content Writer at Edumarz
The firm records the following business transactions in journal proper which are not recorded in special journals:
Opening Entries: Opening entries are recorded in the beginning of the financial year to open the books by recording opening balances of Assets, Liabilities, and Capitals.
Closing Entries: Closing Entries are recorded at the end of the financial year to close the accounts relating to expenses and revenues by transferring them to Trading Account and Profit and Loss Account.
Adjustment Entries: To adjust the amount of expenses and incomes paid or received in advance which is not yet settled in cash.
Rectification Entries: To rectify the error of books of original entries and ledgers.
Transfer Entries: When the amount is to be transferred from one account to another account.
Other Entries: Besides the above-following entries are also passed in journal proper:
(i) Dishonour of a cheque and cancellation of
discount received or discount allowed earlier.
(ii) Transactions of purchase and sale other than goods on credit.
(iii) Drawings by owner
(iv) Distributed goods as free samples.
(v) Endorsement and dishonor of bills of exchange.
(vi) Transaction of consignment and joint venture, etc.
(vii) Loss of property by fire or theft.
Journal proper is also known as Journal Residual and General Journal.
As we discussed in the previous question Special Journals record transactions in the following manner:
Cash Book: All cash-related transactions of the business are recorded in the Cash Book.
Purchases Book: All credit purchases of goods of the firm are recorded in the Purchase Book.
Sales Book: All credit sales of goods of the business are recorded in the Sales Book.
Purchase Return Book: All purchase returns of goods to suppliers by the firm which purchased on credit are recorded in the Purchases Return Book.
Sales Return Book: All sales returns of goods by the customer to the firm which sold on credit are recorded in the Sales Return Book, etc.