Definition, Benefits, and How to Make a General Journal

What is a general journal? How to make a general journal? These questions may pop up in your mind that you have never had before study accounting or keep a general journal.

The general journal itself is one of the many types of journals that are often used in recording business transactions. Below is more complete information about what a general journal is and how to create one.

Understanding General Journal

According to the KBBI, the word journal has the meaning as a book that is used to record transactions sequentially according to time. In accounting, journals are divided into five types. These include closing entries, reversing entries, adjusting entries, special journal, and general journals.

General journal is a type of journal that is rarely used by businesses and companies. Why? Because a general journal is a type of journal that can be used to record all types of transactions that occur in a business systematically and sequentially.

General journals are usually made to record all evidence of financial transactions that occur over a certain period of time. Generally, this journal entry or journalizing activity is carried out by financial staff at the company or company owner if the business is still on a small and medium scale.

With the understanding of a general journal as described above, you can see that a general journal has five functions, namely the historical function, the recording function, the analysis function, the instruction function, and the informative function.

Historical function in the general journal means that the general journal acts as a record of the history of business transactions considering that the recording of transactions is recorded regularly and chronologically. Then, the general journal also has logging function which means all cost,income, assets, until changes in capital are recorded in the general journal.

Furthermore, analysis function means that all transactions recorded in the general journal are the result of transaction analysis in the form of debit and credit columns that are affected.The fourth function is instruction function, meaning that the recording of the general journal is not only limited to documentation, but also orders or instructions for credit debit.

Final, informative function general journal means that the general journal provides an explanation or information from the evidence of existing transactions.

Benefits of Making a General Journal

In addition to having various functions, recording a general journal in a business also has many benefits. The following are the benefits of keeping a general journal:

• Make it easy to record systematically and chronologically.
• Minimize the risk of changing data.
• Facilitate periodic inspections.
• Reducing the risk of changing false reports or fraud.
• Simplify the process of recording to the general ledger.
• Simplify and speed up transaction data processing.
• Be a reference in the future.
• Increase efficiency.
• Makes it easy to input data details.

How to Make a General Journal

Making a general journal can be done in three ways, namely by understanding the basic accounting equation, collecting evidence of transactions, then recording the general journal. In detail, the following is an explanation of the stages of making a general journal.

Understanding Basic Accounting Equations

When entering transactions into the journal, you are required to be able to identify or analyze the category of transactions and which account groups are used. Of course, you cannot master this ability without understanding the basic accounting equation which can be written like this:

The accounting equation can also be translated into the following:

Then, from the accounting equation, you can find out the five accounts used at the time of recording the journal, as well as their normal balances. Is it a debit or a credit and how the transaction affects the credit debit on each account as in the image below.

Collecting Proof of Transaction

After understanding the basic accounting equations, the next step is to collect evidence of transactions. Proof of transactions that can be used include proof of transactions such as notes, receipts, invoices, invoices, and others. Keep in mind, evidence of transactions that can be recorded in the general journal is only evidence of transactions that affect the financial position.

Recording the General Journal

The last step that you must take after the proof of the transaction is collected is to record the general journal. Create a general journal writing format in which there are debit and credit columns, as well as the date of the transaction. In journal entry, make sure transactions are recorded in chronological order and the debit and credit amounts are always the same.

To facilitate journal entry, you can also use accountancy which now has many types. Using an accounting application to record this journal can also be the first step for your business to go digital.

Well, that's the information on how to make a general journal in a business. Hopefully the above information can help you in starting recording business transactions with a general journal.