The different types of journal entries

Journal: An accounting record where all business transactions are originally entered. A journal details which transactions occurred and what accounts were affected. Journal entries are usually recorded in chronological order, and using the double-entry method of bookkeeping.

Different types of journal:

(1)   Simple journal entry:

When in an entry one account is debited and the other account is credited for a transaction is called simple journal entry. Generally one transaction involves two accounts. Most of the journal entries are simple journal entries.

(2)   Compound journal entry:

When for a transaction more than two account are involved in an entry, it is called compound journal entry

(3)   Adjusting journal entry:

At the time of preparing financial statements at the end of accounting period the entries through which accrued income and expense, advance income and expenditure, depreciation, allowance for bad debt etc. Are adjusted are called adjusting journal entries.

(4)   Closing journal entry:

The journal entries, through which all accounts relating periodic income and expenditure are closed transferring them to income statement prepared at the end of accounting period, are called closing journal entries.

(5)   Reversing journal entries:

Preparation of reversal entries is the last step of accounting cycle. Passing reversal entries is not compulsory. It is an optional step of accounting cycle. Reversal entries are adverse to adjusting entries which are passed at the beginning of next financial year. In fact, reversal entries are passed for outstanding and advances of previous year in the beginning of an accounting year which are opposite to adjusting entries. Reversal entries are made only for adjusting entries no reversal entries are required.

(6)   Opening journal entry:

The journal entry through which closing assets and liabilities of previous year of an ongoing business concern are shown as opening assets and liabilities current year in the books of accounts are called opening journal entry.

(7)   Rectifying journal entry:

The entries through which errors and omission in accounts are rectified are called rectifying journal entries.