Short Answer

The journal is called the “book of original entry” because it is the first place where all business transactions are recorded. Every financial transaction is first written in the journal before being posted to any other account. It is the starting point of the accounting process.

It records transactions in chronological order with proper details like date, accounts involved, and narration. Since it is the first record of all transactions, it is known as the book of original entry.

Detailed Explanation:

Journal Called Book of Original Entry

Meaning of book of original entry

The journal is known as the book of original entry because it is the first book in which every financial transaction is recorded. Whenever any business transaction takes place, it is first written in the journal. No transaction is directly recorded in the ledger without being entered in the journal first.

This makes the journal the starting point of the accounting process. It acts as the base or foundation of accounting records. All later accounting steps depend on the entries made in the journal.

The term “original entry” means the first or initial recording of transactions. Since the journal is the first place where transactions are recorded in detail, it gets this name.

Reason for calling journal book of original entry

The journal is called the book of original entry for several important reasons. First, it records transactions in their original form immediately after they occur. This helps in avoiding confusion and ensures accuracy in accounting records.

Second, it records transactions in chronological order, meaning they are written according to the date they occur. This helps in maintaining a proper sequence of events in business.

Third, every transaction is recorded with full details such as date, accounts involved, amount, and narration. This complete recording makes the journal the first and most reliable source of accounting information.

Another reason is that all entries in the journal are made using the double-entry system. This means every transaction has two effects, debit and credit. These original entries are later transferred to ledger accounts for classification.

Since no other book records transactions before the journal, it is considered the primary or original source of accounting data.

Importance of journal as original entry book

The journal plays a very important role in the accounting system. It ensures that all business transactions are recorded in a systematic and organized manner from the beginning. This helps in maintaining accuracy in financial records.

It also helps in reducing errors because transactions are recorded immediately after they take place. The detailed narration in each entry helps in understanding the nature of the transaction clearly.

The journal also supports the preparation of ledger accounts. After recording in the journal, entries are posted to different ledger accounts. This process helps in classifying transactions under different heads like assets, liabilities, income, and expenses.

Without the journal, it would be very difficult to maintain proper accounting records. Businesses would face confusion in tracking transactions if there was no first record book.

The journal also helps during auditing. Since it contains original and detailed entries, auditors can easily verify financial transactions by checking journal entries.

Role in accounting process

The journal is the first step in the complete accounting cycle. After transactions are recorded in the journal, they are transferred to the ledger. Then a trial balance is prepared, followed by final accounts like profit and loss account and balance sheet.

Because all accounting records begin from the journal, it is considered the foundation of the entire accounting system. It ensures that financial data is accurate, complete, and properly organized.

Conclusion

The journal is called the “book of original entry” because it is the first book where all financial transactions are recorded in detail. It acts as the starting point of accounting and provides the base for all further accounting processes. It ensures accuracy, order, and completeness in financial recording.