 I welcome you to this session. In this session, we will discuss the Unit 5 Accounting Process 2 of Financial Accounting of Become First Semester. In this session, we will discuss the first part that is the journal and how the transactions are entered in journal. The whole discussion will be divided into three parts, the first part that I have already mentioned, it will be on journal and how to record the business transactions in journal book. The second session, we will discuss about the subsidiary books and the third part of the discussion will focus on the preparation of leisure. So, learners, let us begin with the first part that is the journal. So, journal is a book of account. Book of accounts means the book where accounts are there, means the book contains the accounts. Accounts we know that it is a particular head where the transactions relating to that particular head are recorded. So, all the transactions will not be recorded, only the concerned transaction relating to a particular account will be recorded in the particular place that is known as account. So, the book that contains the accounts, for example, the book may contain the accounts of all the creditors, the accounts of all the debtors. So, these are the books of accounts. All the purchased transactions will be recorded in a particular account that is purchase account. So, purchase account will be in the book of account. So, the books of accounts means the book which contains the different accounts. In the accounts, we know that the business transactions are recorded. Any transactions that takes place in the business will be recorded in the accounts. These transactions are recorded in a very systematic way. First we will record it in a particular book that is journal, then we will post it to the ledger and then we will prepare the trial balance as well as the final accounts. So, all these transactions will be recorded on the basis of double entry system. Double entry system that we have already discussed in unit 4, it is the system where debit and credit amounts are equal. So, we will discuss it further. Let us move. Now, types of books of accounts. So, books of accounts that contains the accounts and these books of accounts can be classified as primary book and secondary book. So, primary book will contain the journal book means the primary book is the journal book. It is also known as book of original entry. Means, any transaction that takes place in the business that affect the business will first be recorded in the journal book. That is why it is called as the original entry. The first book of account where a business transactions as it takes place will be recorded in journal. The secondary book. Secondary book is the ledger book. This is also known as book of final entry. Means, all the transactions recorded in the journal will be posted to ledger. From ledger, we will move towards the preparation of final accounts. So, journal is very important as any transaction that affect the business will be recorded. So, in journal, how the transactions will be recorded? The first of all, transactions are recorded on the basis of dates. So, a chronological order is followed when transactions are recorded in the primary book. Then, transactions are recorded on the basis of certain documents. These are known as source documents. These are proof that a particular business transaction has taken place and the accountant is authorized to record that particular transaction in the journal. So, these source documents may be cash receipts, may be vouchers, may be bills, invoices, etc. So, this is the documentary evidence of a transaction that a transaction has taken place in the business and this is the evidence. On that basis, the accountant will record that particular transaction in the journal book on the date on which the transaction takes place. Then, transactions are recorded as debit and credit. So, debit will be recorded or a part of the transaction will be recorded on the debit side of the account and the other part that is credit part will be recorded on the other side of the account. Let us take two examples. A very simple example that two transactions take place. Number one transaction furniture purchased for Rs. 10,000 on October 2020 and the second transaction which purchased for Rs. 5000 that took place on 22nd October 2020. So, this is the format of the journal and on the date column, we will record the date where the transaction takes place. Then, in particular column, we will record the details of the transactions, the debit. As you can see, furniture account has been debited and cash account has been credited and again we will see the column LF that is ledger folio. We will discuss this later on. Then, there is two columns are there, debit column amount, 10,000 and credit column amount, 10,000 we have written against the first transaction. Again, in the second transaction, we have recorded the date, the date when the transaction takes place. Then, we have debited purchase account and next we have credited the cash account. Then, the same amount has been written on the debit column amount that is 5000 as well as on the credit amount column, the same amount 5000. So, this transaction has been recorded by following the double entry system of bookkeeping where debit equals to credit. So, same amount has been recorded in both the amount column of debit and credit. Then again, we can notice within brackets in both transactions, we have recorded a particular line that is being furniture purchased and in second case, being goods purchased. So, this is known as narration. This is a brief explanation of the transaction. What has been recorded? It is written as being that is traditionally added and just is written to know the meaning of that particular transaction. Steps in recording the transactions in journal book. So, this is important because we have to follow these particular steps to record any transaction in the journal book. The first step is identification of accounts involved in a particular transaction. Any transactions that you have to record it in journal, first you have to identify the accounts. Then, in the second step, we have to classify the accounts and in the third step, the application of the rules of debit and credit according to the double entry system of bookkeeping. So, we will discuss these steps with an example. So, let us record the transaction goods sold for rupees 3000. So, in this transaction, what has happened that we have sold goods means our business has sold goods for an amount of rupees 3000. In the first step, we will identify the accounts that are involved in this particular transactions. In this transaction, the accounts involved are sales account means we have sell some goods. Goods mean that our business regularly deals in and the amount of the sales is rupees 3000. So, sales account number one and number two cash account. These two accounts are involved in this particular transaction. So, in the first step, we identified the accounts that are involved in this particular transaction. In the second step of recording transactions in journal is classification of the accounts means we will classify the accounts. You are aware that according to traditional approach, we can classify the accounts as personal account, real account and nominal account. So, sales account is nominal account that relates to expenses and losses and incomes and gains. Then cash account as cash account is involved in this particular transaction, cash account is real account that signifies the property of the business. So, cash is property. So, it is a real account. So, in the second step, we classify the accounts. What are the accounts? And in the second step, we classify the type of account. In the third step, we will follow the rules of debit and credit. And according to the rule, in relation to nominal account, debit, all expenses and losses and credit incomes and gains means any expenses, any losses relates to the nominal account and it will be debited. And incomes and gains related to the nominal account. So, it will be credited. So, in this particular transaction, this will be the journal entry. So, debt we have in a debt column we have recorded the debt 2210 2020. In the particulars column, we recorded cash in the debit side. Whenever we sell goods for cash, cash comes into the business. So, if we apply the rule of real account, cash is a real account. So, according to the rule, debit what comes in and credit what goes out. So, cash comes into the business whenever a sale takes place for cash. So, cash account has been debited. It is written as cash account and against that we have written the short form of debit that is DR. And sales account, it is a nominal account, it gives revenue, it gives income to the business. So, we have applied the rule of nominal account means incomes and gains are recorded on the credit side according to the rule. So, we have credited this sales account for this particular transaction. So, cash account debit to sales account and what we have done in this particular transaction, goods have been sold. So, being goods sold, we have recorded it in the form of narration. Both the columns of debit and credit will be recorded as 3000 and 3000 according to the double entry system which says that debit must be equal to credit. So, this is all about the first part where we have discussed what is journal. Journal is a primary book where transactions are recorded chronologically. And we have also seen how to record the transactions in journal book. There are three steps and we have followed all the steps and how to record the transactions by identifying the accounts, by classifying the accounts and by applying the rules of debit and credit. Thank you.