Which Of The Following Statements Is (Are) Correct Regarding A Journal?

The correct statements are (A), (B) and (D), as Journal is used to record Business Transactions in chronological order i.e., date-wise. For example, On 1^st January, 2024, Mr. A started the business with cash of $100,000. On 2^nd January, 2024, he purchased merchandise worth $5,000. On 3^rd January, 2024, He sold merchandise worth $10,000. These are the business transactions and these are entered in journal date-wise i.e., every business transaction is Journalized in journal in the order of date. No entry can’t be come first which is occurred lately i.e., first date entry will come first, then second one and so on. In this example, we record first entry in journal which occurred on 1^st January, 2024, that is debit the cash account and credit the capital account. The second entry will come next according to date which is here debit purchases account and credit cash account. Then, third entry to on 3^rd January, 2024, is to debit cash account with $10,000 and credit sales account with $10,000. In journal, we see both debit accounts and credit accounts involved in the business transactions.

The option (C) is incorrect, as journal can’t show you the balances of all accounts but the Ledger can show you the balances of all accounts involved in the business transactions. The ledgers show all of the debit account balances and credit account balances at the end of the accounting period. So, a journal can’t report the balance of all accounts in a business.

The option (E) is also wrong as entering business transactions in the journal is called Journalizing and entering transactions in Ledger is known as Posting. After recording transactions in journal, the next step is to transfer the accounts to concerned ledger’ accounts to show balance of each account separately so that the business will know what amount of balances each account has at the end of the accounting period. After recording business transactions in ledger, the next step is to transfer account balances from ledger to Trial Balance to summarize the monetary value of each account, whether an account recorded on debit side or credit side, at once place.