The General Journal is the book of first entry for transactions that do not fit into a special journal or the Cash Book. Every entry shows the account debited, the account credited, and a narration (short explanation).
Transactions in the General Journal
- Opening entries — recording balances of assets, liabilities and capital at the start of a period.
- Purchase of a non-current asset on credit — e.g. buying a vehicle by instalment.
- Disposal of a non-current asset on credit.
- Correction of errors and writing off bad debts.
Key idea
Format: the Debit entry first (flush left), then the Credit entry (indented right), followed by a narration. Total debit must equal total credit.
Example entry
On 1 March, a vehicle costing RM45,000 is bought from Auto Jaya on credit.
| Particulars | Debit (RM) | Credit (RM) |
|---|---|---|
| Vehicle | 45,000 | |
| Auto Jaya | 45,000 | |
| (Purchase of vehicle on credit) | ||
Example
Mr Chong's debt of RM300 is written off as a bad debt: debit Bad Debts RM300, credit Chong RM300.
Posting to the ledger
After being written in the General Journal, each entry is posted to the ledger following its debit and credit columns. For example, the opening entry debits all asset accounts and credits the liability and capital accounts. The narration helps an auditor understand why a transaction was recorded, while the date and reference make it easy to cross-check between the journal and the ledger.
Remember
Credit purchases of goods (for resale) go in the Purchases Journal, NOT the General Journal.