Books of Original EntryDefined with Examples

Patrick Louie
Last Updated: November 19, 2021
Date Published: November 19, 2021

So you started a business.

That’s great and all, but have you already thought about how you’d keep track of your business’s transactions?

If not, then read on.

In order to monitor the growth of your business, you’d need to maintain records of all its transactions.

To have a record of your sales, you retain a copy of the official receipts or invoices that you issued to your customers.

To have a record of your purchases and expenses, you retain a copy of whatever document (e.g. invoice, official receipt) your supplier or service provider gives you.

For cash payments, you retain a copy of the proof of payment that your payee gives you.

Now, do you think that all of these are enough to monitor your business’s transactions?

If you ask me, I’d say no.

The reason is that these documents only give you proof of your business’s transactions.

They don’t give you a summary or picture of your business’s financial position… well they might if you add them all together.

But imagine having to do that every time you want to know the financial status of your business.

Sounds tedious huh?

That’s because it is!

For that, we need to rely on another document, or maybe a set of documents depending on the volume of transactions.

This document or set of documents is what we call the book(s) of original entry.

Whenever your business has a transaction that needs to be recorded, you enter them into your book(s) of original entry.

That way, you have a handy document that you can consult whenever you want to view all of your business’s transactions.

Journal Entry Examples

What is a book of Original Entry?

A book of original entry is an accounting book or journal where you first record all of your business’s transactions.

It is also known as the book of prime entry.

The details and descriptions of each transaction as well as its source document (if there are any) are typically included when an entry is made in the book of original entry.

At the end of the period, all information recorded in the book(s) of original entry will be summarized and then subsequently posted into a business’s general ledger.

The information posted in the general ledger will then be used in the preparation of the financial statements.

A prime example of a book of original entry is the general journal.

Most small businesses record all of their daily transaction in a general journal.

Special journals such as the sales journal, purchase journal, and cash book are also examples of books of original entry.

Components of a book of original entry

accounts receivable ledger

While you can customize the contents of a book of original entry to an extent, certain details are mandatory and should be found in one.

These are the following:

Date of the transaction

Before you can even record any other details about the transaction, you must first enter the date of the transaction.

Since a book of original entry such as a general journal is a chronological recording of all the business’s transactions, it won’t do if the transaction date is missing.

Narration or description

A narration or description provides us with the details of the transaction.

Aside from that, it explains the reason why the transaction is recorded.

This is especially important for a general journal where all kinds of transactions are recorded.

Reference to the source document

For monitoring purposes, every journal entry must provide a reference to its source document (e.g. invoice number).

This is to prove that a transaction does exist, as well as prevent the recording of fictitious transactions.

Referencing the source document could also help in tracking errors and discrepancies should there be any.

The monetary amount of the transaction

To properly account for a transaction, the monetary amount related to it must be included.

Without the monetary amount, we wouldn’t know the financial impact the transaction would have on the business.

Relevant party details

This more so applies to transactions that are recorded or to be recorded in a special journal, although it might apply to a general if no special journal is maintained.

For example, in a sales transaction, details about the customer such as customer name must be mentioned on the entry.

Doing so will make the process of accounting for how much a customer still owes the business much easier.

Mention which ledger account the transaction goes to

This more so applies if a business maintains subsidiary ledgers (e.g. accounts receivable ledger, accounts payable ledger).

To ensure that transactions are posted into the right subsidiary ledger or general ledger accounts, a reference to which ledger the transaction should go to is essential.

For example, credit sales recorded in the sales journal must be posted on the sales accounts in the general ledger.

The generated accounts receivable from such credit sales should posted into the accounts receivable ledger (if the business maintains one).

Books of Original Entry

The two types of Journals (General Journal and Special Journal)

There are two major types of accounting journals: the general journal, and the special journal.

They are similar in that they function as a book of original entry – transactions are first recorded in these books before they are posted into a ledger.

Where they differ is the type of transactions that are recorded in them.

Whereas the general journal captures any type of transaction, a special journal only captures a certain type of transaction.

For example, a sales journal only captures credit sales transactions.

If a business has both a general journal and special journal(s), the general journal will only capture transactions that aren’t already included in the special journal(s).

That way, the re-entry of an already recorded transaction will be avoided.

The General Journal

A general journal is an accounting journal in which a business’s transactions are recorded in chronological order.

It is a book of original entry as every transaction are recorded in it as they occur.

For example, if a business makes a sale, the details of the sale such as the transaction date and the amount, as well as its description will be recorded in the general journal.

A typical general journal will have the following column items on every page:

  • Date –input the transaction date on this column
  • Particulars – this is where you input the particular accounts to be debited and credited; this is also where you input the narration or description of the transaction
  • Reference – input the serial number or tracking number of the source document on this column; this can be sometimes found on the description
  • Debit – input the amount(s) to be debited on this column
  • Credit –input the amount(s) to be credited on this column
  • Serial Number – this is to indicate the place of the journal entry in the series

To illustrate, let’s say that a business made a cash sale of $15,000 on January 3, 2020.

The sale is supported by a sales invoice with serial number 001.

It is the first-ever transaction to be recorded in the business’s general journal.

The entry to be recorded on the general journal will be:

Serial No.DateParticularsRefDebitCredit
To record cash sale

For most small businesses, the general journal will usually suffice as their only book of original entry.

Since they’ll probably have a low volume of transactions, it probably won’t be hard to track individual transactions.

However, for medium and large businesses that have higher volumes of transactions, special journals might be needed as to not overcrowd the general journal.

The general journal will then only be used for transactions that won’t be recorded in the special journals such as depreciation and amortization.

Special Journals

A special journal is an accounting journal that only includes transactions of the same nature.

Much like the general journal, it is a book of original entry as it is where transactions of a specific type are first recorded.

The main reason why a business might want to maintain a special journal is that it wants to segregate specific transactions from other transactions.

It could be because there is a large volume for that specific type of transaction.

Or it could be that management wants to give more focus to these transactions.

By maintaining a special journal, these transactions can be easily identified, managed, handled, and controlled.

The main reason why a business might want to maintain a special journal is that it wants to segregate specific transactions from other transactions.

It could be because there is a large volume for that specific type of transaction.

Or it could be that management wants to give more focus to these transactions.

By maintaining a special journal, these transactions can be easily identified, managed, handled, and controlled.

The following are common examples of special journals:

  • Sales Journal – all credit sales are recorded in this special journal
  • Purchases Journal – all purchases on credit are recorded in this special journal
  • Sales Returns Journal or Return Inwards Journal – this is where sales returns are recorded
  • Purchase Returns Journal or Return Outwards Journal – this where purchase returns are recorded
  • Cash Book – a notable special journal in which all cash transactions (e.g. cash receipts, cash disbursements) are recorded

Example of an entry made in a special journal

Unlike the general journal in which transactions are recorded in the form of double entries, transactions recorded in a special journal are usually in the form of single entries.

To illustrate, here’s an example of entries entered in a sales journal:

Sales JournalSheet No: 12
DateCustomerInvoice NumberAmount
3-Apr-21John Doe211$2,300.00
7-Apr-21Jane Smith212$1,500.00
18-Apr-21Alexander Laurens213$1,875.00
18-Apr-21Aaron Hamilton214$1,690.00
19-Apr-21Ralph Burr215$3,977.00
25-Apr-21Theodosia Schuyler216$11,260.00
28-Apr-21James Newton217$9,670.00

Notice that there is no debit and credit entry?

Another feature of special journals is that they’re heavily customizable.

Aside from the bare minimum (e.g. transaction date, amount, reference), the details to be included in a special journal can be engineered to cater to the needs of the business.

For example, a sales journal may include details about the products being sold.

The cash book is notable among special journals as it functions as both a journal and a ledger.

It can also be sub-divided into the cash receipts book (which only records cash receipts), cash disbursements book (which only records cash disbursements), and petty cash book (which records any transaction related to the petty cash account).

Books of general entry and the advent of technology

Nowadays, businesses use accounting software that makes the maintenance of books of original entry a bit redundant.

Most accounting software instead maintains a central repository.

This central repository does the job of recording journal and ledger entries simultaneously.

Wow! Isn’t that convenient?

With it, the process of recording transactions is now easier as you no longer have to maintain separate books.

As such, the concept of “books of original entry” is more catered toward businesses that maintain manual books of accounts.

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  1. University of Nebraska-Lincoln "General Ledger - GL Accounts" Page 1 . November 19, 2021

  2. Open Learn "Balancing off accounts and preparing a trial balance" Page 1 . November 19, 2021

  3. UMass Lowell "Verifying Data in the General Ledger: Trial Balance" Page 1 . November 19, 2021