How to pass a journal entry?
Meaning, you understood what is journal?
The first time we record an accounting transaction in a
book, that book is called journal or book of original entry.
Now, today we have to see how to enter that book.
How to pass a journal entry in the book of original entry,
that is journal.
There are some steps to do journalizing, to do journal
entry.
Now, should I say journalizing?
Should I say journal entry?
Should I say writing in the book of journal?
Should I say writing in the book of original entry?
All have the same meaning.
What? The steps of the book in which the transaction is
being recorded for the first time.
The process of analyzing all the business transactions of
debit and credit and recording them in the journal is
called journalizing.
Recording a transaction in a book for the first time is
called journalizing.
Let's move towards the main topic.
Following are the steps to be followed in journalizing the
transactions.
Brother, we have to understand this.
First, we will not do anything. We will read it.
We will read it properly. We will not do anything.
We will just read it once.
How is it written? What is it?
Determine the two accounts involved in the transaction.
There will be two accounts involved in the transaction.
Determine those two accounts.
I know very well what I am saying.
It is not completely fitting in your mind right now.
The angle is somewhere weak.
The matter is not being fulfilled.
The key is not entering the lock completely.
I know very well.
But friend, you keep listening for a while.
Then the car will start moving slowly.
And will reach in full flow.
Classify the accounts into assets, liabilities, capital,
expenses, and incomes.
If you do not know the meaning of these, and you are
watching this class, assets, liabilities, capital,
expenses, and incomes, then you have definitely not seen
the previous classes.
You have broken the series.
Read chapter number 2, Basic Accounting Terms.
You will understand the meaning of these.
What is step number 2?
The accounts involved in the transactions in step number 1,
the accounts involved in the transactions in step number 1,
we have to classify those accounts.
Which account is an asset?
Which account is a liability?
Which account is a capital?
Which account is an expense?
Which account is an income?
There are two accounts written above in the first step.
There can be more than two accounts in a transaction.
If it is a compound entry.
We will see this slowly.
The transaction that has an effect on two accounts, that is
a simple journal entry.
The transaction that has an effect on more than two
accounts, that is a compound journal entry.
You can also say that the mix-up of two simple journal
entries is called compound journal entry.
In the first step, there can be more than two accounts.
We have to classify those accounts.
Which account is an asset?
Which account is a liability?
Which account is an income?
Which account is a capital?
Which account is an expense?
No. 3
Apply the rules of debit and credit for the above two
accounts and identify which account is to be debited and
credited.
In the first step, we found out which accounts are which.
In the second step, we classified those accounts.
Asset, liability, capital, expense and income.
In the third step, we are applying the rules of debit and
credit.
Sir, what are the rules of debit and credit?
What are the rules of debit and credit?
These are the rules of debit and credit written on the last
page.
First rule, debit the receiver, credit the giver.
Second rule, debit what comes in, credit what goes out.
Third rule, debit all expenses and losses, credit all
income and gains.
Credit all income and gains.
These are the rules.
I would like to tell you something else about these rules.
Actually, there are not three but six rules.
Sir, we can see three.
Debit the receiver, credit the giver.
Debit what comes in, credit what goes out.
Debit all expenses and losses, credit all income and gains.
We can see three.
There are six.
How, sir?
Debit the receiver, rule number one.
Debit what comes in, rule number two.
Debit all losses and expenses, rule number three.
There are three rules for debiting.
Similarly, there are three rules for crediting.
Credit the giver, fourth.
Number five, credit what goes out.
And number six, credit all income and gains.
We can use three rules for debiting.
And we can use three rules for crediting.
So, there are three for debit and three for credit.
There are six rules in total.
We think these written events are three.
Do you know what confusion is created by this in future?
Why am I telling you this separately?
In the first class.
Friends, this creates confusion.
My brother, my friend, my companion, my friend.
Do you think that with the rule of debit the receiver,
credit the giver will be applied?
With debit what comes in, credit what goes out will be
applied.
With debit all expenses and losses, credit all income and
gain will be applied.
No! With debit the receiver, credit what goes out can also
apply.
With debit the receiver, credit all income and gain can
also apply.
One of the three rules of debit can be applied to rent the
credit.
One of the three rules of credit can be applied to run the
credit.
So, any rule of debt can be applied with any rule of credit.
So, these are all independent in itself.
They are not attached.
Debit the receiver with credit the giver.
It is written but not connected.
Debit word comes in, credit word goes out.
It is not connected, it is written.
Debit all expenses, credit all income.
It is not connected, it is just written.
Rest, anyone can go with anyone.
There is no such prohibition.
Number 4.
Fourth step.
Record the date of transaction, particulars of transaction
and mention the respective debit and credit amount against
each item.
This is a presentation.
We will do this in a while.
Number 5.
Write a brief description of the transaction recorded
within brackets in the next line in the particulars column.
Such description is termed as narration.
We have to write a narration on number 5.
I will show you in a while.
Number 6.
Draw a line across the particulars column to divide one
journal entry from the other.
Put a line in the middle after the end of a journal entry
so that the next journal entry can be seen separately.
This is not a big deal.
This is a child's step.
Sixth step.
Draw a line below after entering the journal entry.
When you were a small child, you used to do mischief.
You used to go to school.
You used to keep it in the hand of your brother.
It is a matter of those days.
As you used to answer one question, one question, in Hindi
copy, in English copy, you used to put such a line below it
that now it is over.
The next one is starting.
Next is starting.
Right.
Okay.
This point is written here in exactly the same way.
Now I will show you this by doing six steps.
If you do this and show, it will be fun.
Okay.
When are we refusing?
We will do this and show you now.
Take this, friends.
Some examples.
I start from my side.
Some examples.
I start from my side.
Okay.
Write one more thing.
Before moving forward.
It is not in your notes, but it will be very useful.
It will be very useful.
Write it.
Sir, where should I write this?
Write it in your register.
And if you have a hard copy of the notes, then write it
somewhere.
Okay.
Take this.
I am making you write something.
Very precious.
It will be very useful.
This formula.
Number one.
Asset.
Number two, liability.
Income.
Expense.
Capital.
Drawings.
Asset, liability, income, expense, capital, drawings.
Friends.
These six types.
These six types of things.
You will get to see them in any journal entry.
Nothing will come out of this.
There will be no seventh thing.
I am not feeling well, friends.
A little.
Viral is going on everywhere.
I have a sore throat, actually.
And do you know the biggest problem?
Even if you do the recording, you have to keep the AC on.
You have to keep the AC on because the camera gets hot in
the summer.
When it gets hot, the battery fluctuates a little.
That's why you have to keep the AC on.
I have a sore throat here.
The AC is on there.
But still, our passion, the end to teach you.
I know.
You are also adjusting four things.
Your passion, your passion to learn.
It will keep us moving forward.
It will not stop us.
We would keep moving on.
Asset, liability, income, expense, capital, drawings.
Whenever the asset is increasing,
Whenever the asset is increasing, we will debit it and move
on.
And whenever the asset is decreasing, decreasing, we will
credit it and move on.
We will credit it and move on.
Tell me the rules of debit and credit.
We have written the rules of accounts there.
First, classify the accounts.
Then see, debit the receiver, credit the giver, debit what
comes in, credit what goes out, debit all expenses and
losses, credit all income and gain.
We have learned all that.
This is its simplified version.
It's a simplified version of that.
What happens?
What happens when you add a lot of money to money?
What happens when you add a lot of concepts to concepts?
Friends, some people find that rule to be typical.
That's why I'm making you write in their simplified version.
If you can't make a point from there, then you can make a
point from here.
If he leaves his hand, he will never leave his hand.
That can be a little difficult.
This is definitely easy.
We call it the traditional approach of setting rules.
We call it the modern approach.
If the liability increases, it will be credited.
If the liability decreases, it will be debited.
If the income increases, it will be credited.
If the income decreases, it will be debited.
If the expense increases, it will be debited.
If the expense decreases, it will be credited.
If the capital increases, it will be credited.
If the capital decreases, it will be debited.
If the drawings increase, it will be debited.
If the drawings have to be reduced, it will be credited.
Write it quickly, friends.
How will you do it? What is it? How is it?
Don't worry, the examples are coming now.
Write it first.
We will not talk about those rules.
We will do it from here.
It will be fast through the simplified version.
Do you know what will be the benefit of this?
When you apply it through the rule, it takes time to think
about doing a general entry.
And you are sitting in the office, you have to do the
entries quickly.
So it will take a lot of time to think about the rule.
Where does the boss give you so much time?
That's why if you do it with this approach, it will be
terrible.
Results will be fast, accurate.
The work will be faster, efficiency will come.
You will stand in front of the boss and say,
I have done the work on time.
Now tell me how much is the salary increasing?
Okay, sir. Okay.
Write it quickly.
I have written it, sir.
Very very good.
Well done.
Now let's move ahead.
We post the transaction in the journal.
We are learning that.
So I will present some transactions in front of you.
First transaction.
Number 1.
For example,
Pure Professional
Private Limited
Pure Professional Private Limited started
business
with a capital of
rupees 10 lakhs
deposited
by the shareholders of
Pure Professional
deposited by the shareholders of Pure Professional
into the
bank account of the organization
into the bank account of the organization
Sorry. Write it quickly.
Write it quickly.
Yes, sir. I have written it.
I have said very very good.
Well done. Cool.
Friends.
Come here.
Let's move ahead.
And from this transaction, let's go to the next step whose
name is
Journal Entry, Journalizing
Write in the Journal.
Write in the Book of Original Entry.
Say whatever you want.
The most common term is Journal Entry.
That's why I am using it.
First of all,
what steps do you have to take?
Let's go back there.
Now let's follow the steps.
First look at this transaction.
What is the transaction?
An organization whose name is
Pure Professional Private Limited.
Let's not do so much for ourselves.
What is our benefit?
Started business with a capital of rupees 10 lakhs.
Pure Professional Private Limited is a private company.
It has been started with a capital of 10 lakhs.
And who has invested that 10 lakhs? Pure Professional's
shareholders have invested it.
Those who invest money in
Private Limited Company or Limited Company are called
shareholders. For example, my personal business is called
owner.
And Lalit Khurana Sir whose Pure Professional Private
Limited is called shareholders. These people who invest
capital.
Sir must have done it.
And one more person must have done it.
Minimum two shareholders are required.
Alright.
So, where has the shareholder invested the capital?
Into the bank account of the organization.
Organization. In the name of
Pure Professional Private Limited, the account is opened in
the bank.
Current account.
Not in the name of shareholder.
In the name of business.
In the name of company, firm or individual sole
proprietorship.
The account is opened in the bank.
A current account is opened.
The account is opened in the bank.
And then the Pure Professional Private Limited shareholders
who are investing 10 lakhs as capital, who are giving birth
to this organization, with their personal savings account,
in the current account they will transfer the capital.
This is the practical approach of this transaction.
And it happens.
This transaction happens in every business.
Practical is complete.
Whatever I am saying in front of you.
Dicto, everything is practical.
Completely, totally.
Why are your eyes wide open, sir?
Is the topic so important?
Okay, sir. We got scared.
Don't get scared.
When you are with us, there is nothing to fear.
In the name of Pure Professional Private Limited the
current account will be opened in the bank.
And the shareholders with their personal savings account
will transfer the money in the current account of that
business for 10 lakhs.
This is called capital invested in the business.
This is called investing money in the business.
In a legal way.
You have to do a journal entry for this.
Do you know what is a thumb rule?
Thumb rule means universal rule.
Like the sun rises in the east is a universal truth.
Similarly, accounts have a universal rule.
What is it, sir?
It is this.
Accounting is done
from the point of view of business.
And
Keep writing.
Not from the point of view of
and not from the point of view of
owners oblique shareholders.
It got a little rubbed.
There are two buttons in the pen.
If you press the control Z button, it gets rubbed.
Okay, I will write again.
One minute.
Just give me one minute.
Accounting is done
from the point of view of business.
And
not from the
point of view of
owner or shareholders.
Owners or shareholders.
This thumb rule, this principle, this universal truth, this
infallible truth says that we will do accounting from the
point of view of business and not from the point of view of
owner-shareholder.
That is, while entering any journal, while writing any
transaction in the journal, we have to see what is
happening with our organization, business, pure,
professional, private, limited.
Not what is happening with the owners of this organization,
C.
L. Lalit Khurana Sir and his wife.
In that incident, in that transaction, the role of the
business, which is having an effect on the business, on
pure, professional, private, limited, you have to see that,
you have to record that.
Not the role of the owner, the effect on the owner, you do
not have to record that.
Because the accounting you are doing, profit loss, to
achieve asset liability, whose profit loss, to achieve
asset liability, you are doing accounting of business,
pure, professional, private, limited.
Not the profit loss to their owners.
You are calculating the profit loss to the business.
If you take out of their owners, then their household
expenses will also come.
And in business, we do not take household expenses.
Okay Sir.
This is done.
Remember this thumb rule and go.
So this rule will help us to record the whole transaction.
Think from the point of view of business, what is
happening, not from the point of view of the owner.
Now let's apply those steps.
So we have written these things with us, and this thumb
rule has to go further.
After these two things, we have to apply those steps, which
are written in our notes.
Now let's go again.
Step number 1 of notes.
Determine the accounts involved in the transaction.
Which is written in our transaction.
We have to find out which accounts are affected by it.
Step 1.
Keep writing along with me.
You will also remember the steps.
Determine the accounts involved in the transaction.
Step 1.
Think practically what is happening.
Think about it.
Lalit Sir and his wife transferred some money from their
personal savings account to the current account of Pure
Professional Private Limited.
Both of them made 10 lakhs.
Someone did something, someone did something.
Both of them transferred 10 lakhs.
So which two accounts of the business will be affected by
this?
Which two accounts of the business will be affected by this?
Tell me this.
I will tell you.
Step 1.
This will affect the current bank account of the business.
Yes, money will come there.
So it will affect the bank account.
Yes sir, absolutely.
Step 2.
The capital account of the owners will be opened.
The capital account of the owners will be opened in the
journal of the business.
This is not a bank account.
The children get confused here.
That the bank account is like God.
Someone must be eating like this.
No, no, no, no, no.
Brother, what eats in the bank is a different thing.
And here I write the word account.
These are the accounts that are being opened in the book.
To keep an account of everything.
This account means no bank account.
No Amazon account.
Nothing like that.
This is a simple account.
Means it is being made on a pen and paper.
Here in front of you.
Sometimes they are made in a telly after a few days.
They are being made to keep an account.
There is a sheet of the account book.
Nothing else.
Do not link anything with them.
Okay.
So what will we do?
It will affect a bank account.
And an account called the capital account of the owners
will be opened.
In the books.
An account will be written in the books.
Owner's capital account.
Okay sir.
What is our second step?
The owner is opening the capital account because the owner
is giving money to the business.
We said in the thumb rule.
Owner is different.
Business is different.
Owner is different.
Business is different.
Both are different.
We told you this in the thumb rule.
Owner and business are separate.
So friends.
In the business.
The money coming from the owner.
The business highlights it separately.
That I got this money from the owner.
Because.
In the business, loans will be taken from outsiders and
work will be done.
So the loan money of outsiders should be highlighted
separately.
The account put by the owner should be highlighted
separately.
For this, the money of the owner is written in the name of
the owner's capital account.
This is nothing.
Where the money of the owner will be registered.
That is the heading.
Understand this much.
The money invested by the owner in the business.
Which will be written in the heading.
That is the heading.
Owner's capital account.
Money in the bank.
Money in the current account of the business.
Which will be written in the heading.
What is that heading?
Bank account.
Nothing else.
What is the second step in our notes?
Step number 2.
Classify the account into asset, liability, capital and
expense and income.
Step number 3.
Apply the rule of debit and credit for this.
After that.
Now listen.
The second and third steps.
I have finished it here.
The second and third steps end in this.
That is.
Classify.
Asset, liability, income, expense, capital and drawing.
And then apply this rule of debit and credit.
How is it increasing?
How is it decreasing?
This is the summary of the second and third steps.
Okay.
So write.
Step number 2 and 3.
Classify the accounts.
And apply rules of debit and credit.
In the last step number 1.
We have identified two accounts.
Bank account and owner's capital account.
Now we will classify them.
What is the asset?
What is the liability?
What is the income?
What is the expense?
What is the drawing?
What is the capital?
And then apply the rule.
Debit and credit.
And apply the rule of debit and credit.
Okay.
So we identify the last two accounts.
I write in red pen.
Let's classify.
We have to find out.
What is the bank account out of these six?
Asset, liability, income, expense, capital and drawing.
We have to find out.
What is the capital account out of these six?
Asset, liability, income, expense, capital and drawing.
So friends, let me tell you.
The money in the bank account is the asset.
That is your property.
That is your business.
Means of your business.
The money is in the bank account of the business.
Yes.
So that is the property of the business.
The business can use that money whenever it wants.
That is the asset of the business.
That is the property of the business.
Whatever is deposited in the bank in the name of business.
That money is in it.
So that is the property of the business.
It is an asset.
Okay, sir.
And the owner's capital account.
That is the capital.
That is the capital of the owner.
This is known from the name.
In which heading will the owner's capital account go?
It will go in the heading of the capital.
The owner's capital account will go in the heading of the
capital.
So we will find out on step number two.
That our bank account is an asset.
And the capital account of the owners is ours.
It will come in the heading of the capital.
Okay, sir.
Now what to do?
We have to apply the rule of debit and credit.
If the asset increases, then debit.
If it decreases, then credit.
If the capital increases, then credit.
If it decreases, then debit.
So see.
Is the asset called bank account, bank balance increasing
or decreasing?
Sir, it is increasing.
Now if you think from the owner's angle,
Then the owners have made the payment.
Their bank balance is decreasing.
But thumb rule.
Don't think from the owner's angle.
Think from the business angle.
So if you think from the business angle,
Then money is coming.
Bank balance is increasing.
That's why we will do.
Bank account debit.
Now you don't write.
Stop writing for 2 minutes.
Now only I will write.
That's why you will write.
Bank account debit.
And how much will you write the amount in front? 10 lakh
rupees.
How much will you write the amount in front? 10 lakh rupees.
And you will put the date here.
For example, this transaction is happening on 1st April,
22nd.
You will write rupees above.
Here, okay.
Later.
A little later.
Okay.
After that.
Capital account will come in the heading of capital.
So is capital increasing or decreasing?
Capital is increasing.
Income is increasing.
If the owner has invested money in the business,
Then the owner's income,
Owner's investment,
Owner's capital increased in the business.
So what will we do to the capital account?
We will do credit.
Whenever the capital account increases,
Then we do credit.
So we will write like this.
Capital account credit.
10 lakh rupees.
Capital account credit.
10 lakh rupees.
Owners capital.
Write like this.
Is the entry done, sir?
Yes, friends.
Entry is done.
Now in this,
Let's write one more thing below.
What did we do in the entry?
Entry, In English,
Let's make a little statement and go.
Like we will write here,
Capital invested by owners.
That the capital that the owners have invested in the
business,
We have entered it.
We will write it in English in such a bracket.
That is called narration.
What we have written in English now.
Is the entry done, sir?
Yes, this is it.
After that, we had more steps.
You have more steps.
Record date,
Write particular debit credit.
After that,
Write description,
Brief narration,
And put a line below.
So I have done all these steps.
I have written the date here, I have written the debit and
credit, I have written the amount, I have written the
narration, now they are telling me to draw a line below.
This is a matter of small children, you will not draw such
a line in the telly when you will do it practically.
This step is useless, leave the last one anyway.
Don't pay attention to it.
Okay sir.
So step 4, 5, all this ends here in the presentation of 2
and 3.
Now friends, you must have seen, those who have studied
accounting in 11th and 12th, they must have seen that
nothing like this happens, like sir is showing us.
We have seen there, the entry is written a little
differently.
Shall I tell you how it is written?
There is a little modification of this.
Like this debit is written in short form as DR.
Debit is written in short form as DR.
And remove the credit from here.
And write the word 2 in front of it.
2 means credit is done.
And this whole thing is also scratched a little from here
and put it on the right hand side.
That is, write like this.
2, owner's capital account.
Remove the credit from the front and put 2 at the back.
And there is a little tilt between the bank and this.
There is also a margin, there is a slightly crooked angle.
This is the way of presentation and nothing else.
That's it.
Bank account debit to owner's capital account.
Debit is written in short form as DR.
Remove the credit from the front and put it at the back.
And that too without writing credit in the name of 2.
That's it.
And there will be a little angle from above.
Bank a little left side, 2 a little right side.
Bank account debit to owner's capital account.
10 lakhs, 10 lakhs.
And above, a heading is written here.
Particulars.
The heading of the journal entry is written here in the
name of a particular.
That's it.
The work is over.
These are the steps of journal entries.
When you understand this work same to same here on the pad,
understand it in writing.
After this, when you do the same work in teleprime, it will
look very interesting, very easy, very simple, very logical.
If someone takes you directly to tele, then it is a problem.
When we go to tele from here, there are 4 moons in the
concept.
So revise this video completely.
Revise it completely.
Don't go ahead if there is any doubt in it.
Clear it without me.
Don't go ahead if you have any doubt in this clip.
Then it will be fun.
Otherwise, it will not be fun.
Then it will be a little tight somewhere.
So revise it.
Go ahead.
Have fun.
Thank you.
Bye bye.
And take care for now.