Core concepts
- 01Journal: book of original entry; chronological record of transactions with narration.
- 02Ledger: classified summary; T-account with debit and credit sides.
- 03Posting: transferring journal entries to respective ledger accounts.
- 04Trial Balance: list of debit and credit balances; arithmetical accuracy check.
- 05Three rules: Personal A/c (Debit receiver), Real A/c (Debit what comes in), Nominal A/c (Debit expense/loss).
Flowchart summary
Transaction | v Journal (entry + narration) | v Ledger (T-accounts, balanced) | v Trial Balance (Dr = Cr ?)
Exam-critical pointers
- ⭐Errors not disclosed by trial balance: error of omission, principle, compensating errors.
- ⭐Suspense A/c absorbs trial-balance mismatches temporarily.
- ⭐Compound journal entries combine multiple debits/credits but must balance.
- ⭐Subsidiary books (purchase, sales, returns, cash) avoid bulky journalising.
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