Journals & Source Documents

Module 1:
Foundations of Accounting

Duration:
45-60 minutes

Level:
Beginner to Diploma-Level

➛ Define a journal and explain its purpose.

➛ Identify types of journals | general and special journals.

➛ Understand source documents and their role in recording transactions.

➛ Record simple transactions in the general journal.

➛ Match transactions with the correct source document.

➛ Journal
➛ Source Document
➛ General Journal
➛ Special Journals
➛ Invoice
➛ Receipt
➛ Credit Note
➛ Debit Note
➛ Cheque

A journal is the first book where all business transactions are recorded in date order.

This process is called journalizing.

1. General Journal

Used for
➧ Asset purchase
➧ Adjusting entries
➧ Opening entries
➧ Closing entries
➧ Any transaction not fitting in special journals

2. Special Journals

Used as proof when recording transactions.

Examples
➛ Receipt | cash received
➛ Invoice | goods sold on credit
➛ Cash memo
➛ Cheque
➛ Bank statement
➛ Credit note
➛ Debit note

Date
Account Debited
Dr
Account Credited
Cr
Narration

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Example
Bought stationery for $50 cash.

Date
5/2

Account Debited
Stationary Expense

Dr
50

Account Credited
Cash

Cr
50

Narration
Bought stationery

➛ Identify accounts affected.
➛ Decide which one is debited and which is credited.
➛ Refer to source document.
➛ Write narration.

Match each transaction to the correct source document

1. Cash received from customer
2. Bought goods on credit
3. Returned goods to supplier
4. Supplier sends request for credit note
5. Paid electricity bill via cheque

Options

A. Invoice
B. Debit Note
C. Receipt
D. Cheque Counterfoil
E. Credit Note

➛ Sold goods on credit
➛ Paid wages in cash
➛ Bought a computer for cash
➛ Customer paid money owed
➛ Business borrowed money from the bank

Record the journal entries

➧ Owner invested $5,000 cash into business.

➧ Bought office chairs for $400 on credit.

➧ Paid $120 internet bill.

➧ Returned goods worth $80 to supplier.

➧ Received $300 service revenue in cash.

Name the correct source document

➧ Proof that the customer paid cash

➧ Document sent to a customer when they return goods

➧ Document used to request payment

➧ Proof of bank withdrawal

➧ Document from supplier for goods bought on credit

A grocery store recorded the following transactions

➛ Bought goods worth $600 on credit from Best Suppliers Ltd.

➛ Returned damaged goods worth $100 to supplier.

➛ Received $450 cash from a customer.

➛ Paid $200 for cleaning services by cheque.

➛ Sold goods on credit worth $300.

Questions

➛ Identify the correct source document for each transaction.

➛ Decide which journal each transaction should go into.

➛ Prepare the general journal entries for those that belong in the general journal.

➛ What is a journal?

➛ Which journal records credit sales?

➛ What is a source document?

➛ True or False | A receipt is used for credit sales.

➛ Name one example of a special journal.

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Answers ➧ Here

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Ledger Posting ➧ Here