A business transaction is first recorded in a journal, also called a Book of Original Entry. Journalising is the process of recording a business’s financial transactions in a journal. The transactions entered in a Journal are the basis for posting to ledgers. Journal entries are also used for cross-checking when the ledger balance is not…
Debits and credits are accounting terms that represent the two sides of a financial transaction. Debit is notated “DR” and credit is notated “CR”. The word debit comes from the Latin word “debitum” meaning “what is due” and the word Credit comes from “creditum”, meaning “something entrusted to another or a loan.” A debit (DR)…
There are three different types of accounts in accounting. They are Real, Personal, and Nominal Account. Real Account: A real account, or permanent account, is a general ledger account that does not close at the end of a period or at the end of the accounting year. There are five primary account categories in real…
Recording in accounting refers to keeping a record of monetary business transactions, reflecting the correct picture of assets-liabilities, profits, loss, etc. Recordkeeping helps companies track each business transaction, including new equipment purchases, product sales, service costs, payroll expenses, etc. Accurate recordkeeping provides important information for legal and tax purposes. In addition, recording Transactions in the…