Up until now we have seen that each single business transaction is recorded in a journal entry which is comprised of 2 components, a debit and a credit.
A complete journal entry is comprised of the following components:
1. The account that is debited.
2. The account that is credited.
3. A row of particulars - including date, the type of transaction and the number of the document that is used as a reference for the transaction (receipt, invoice, check and so forth).
Care should be taken to see that the credit line is always recorded a little to the right of the debit line.
The function of the Journal entry is very simple, the immediate recording, as close as possible to the date on which the transaction is carried out, of all economic activities that occur in a business in chronological order (with the recording being made in the new language we have learned, bookkeeping language, that records each single transaction twice, once as a debit and once as a credit).
We will take another step forward. Let us assume that in the above example there were not 5 records but 500. The question is whether we are able to obtain an immediate answer from the journal to the question, "What is the cash balance?" - It is clear that the answer is negative. For this purpose, we must go over 500 journal entries (1000 rows), and from these rows, sort out all the events in which a reference is made to the words 'Cash Account'.
For this purpose, another system exists in bookkeeping that is known as the "Nominal ledger".
Bank Reconciliation Salaries Tax Deduction at Source Value added tax
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