Journal is one of the most important elements of accounting. It is used to record all business operations that take place in a given company. This makes it possible to track cash flows and analyze them. The journal is therefore an indispensable working tool for any accountant.
What exactly is a journal? Definition of the term
A journal is a ledger that collects all financial transactions made by a given company. The journal is the primary source of information about the company’s finances and forms the basis for the preparation of other accounting documents, such as the balance sheet or income statement.
The journal consists of several sections, in which information about particular types of transactions is collected. These sections are:
– Revenues: all revenues of the company, such as sales of products or services,
– Expenses: all expenses of the company, such as purchases of raw materials or fees
– Investments: all investments made by the company, such as the purchase of new equipment or the construction of new headquarters
– Credits and loans: any loans or advances the company takes out
The journal is an extremely important accounting and financial tool. It allows you to keep track of all financial transactions made by a company and allows you to compile other important accounting documents.
