Which of the following statements is INCORRECT in the context of a journal?

The incorrect statement is - Journal is often referred to as the Principal Book of Entry

Key Points

• Journal
  • The journal is commonly known as the Book of Original Entry.
  • Transactions are first recorded in the journal, detailing dates, accounts affected, and the amounts.
  • It provides a chronological order of all financial transactions.
  • The term "Principal Book of Entry" typically refers to the ledger, where transactions are posted from the journal for classification and summaries.

Additional Information

• Types of Journals
  • Journals are classified into two types:
    • General Journal - Used for all types of entries that do not fit into special journals.
    • Special Journal - Used for recurring transactions, such as sales, purchases, cash receipts, and disbursements.
• Entries in Journal
  • The journal records various entries, including:
    • Expense accruals - Adjustments for expenses incurred but not yet paid.
    • Rectification entries - Correcting errors in previous records.
    • Adjusting entries - Adjustments made for matching revenues and expenses in the correct accounting period.
    • Opening entries - Recording the beginning of the financial year balances from the last period.
    • Closing entries - Final entries to close temporary accounts and prepare for the new period.
• Ledger
  • All entries from the journal are posted into respective ledger accounts.
  • The ledger is the Principal Book where transactions are classified into individual accounts for summarization.
  • It helps in preparing the trial balance and financial statements.