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Journal Entry in Accounting - Meaning, Types, Example, How to Record Journal Entries? - YouTube
Channel: WallStreetMojo
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hello everyone hi welcome to the channel
of WallStreetmojo watch the video till
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the end and if you're new to this
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clicking the bell icon friends today we have a topic that is accounting journal
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entries we are gonna understand this in
a detail format but what exactly this
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concept is all about that's what we need
to get into the Nitty Gritty know an
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accounting journal entry it is it's a
formal recording of the transactions
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where you know what happens you debit
and credit of the transactions are
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recorded in the journal ledger and this
is a written record of the commercial
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transactions now there are some types of
accounting journal entries we are going
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to study each and every one of them
first in the transaction entry
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transaction entry is the basic amount
you know basic account or entry for any
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event in the business like for example
let's say there is bill receipt from a
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customer and the bill presented from a
supplier for payment so cash receipts
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entry from a customer and other cash
payment has been done which is an expense
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for that so transaction entry in cash
basis and accrual basis second there is
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thing called adjusting entry now what
exactly this is see adjusting entry is a
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journal entry done at the end of the
accounting year or the accounting period
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what we can say that no it is based on
the accrual basis of accounting right
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see the accounting journal entry is
required at the end to adjust various
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balances balances in the various ledger
accounts which is done to meet the
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financial position of the business
that's what the accounting principle
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like you know let's say gap that has
generally accepted accounting principles
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so in short it is basically a line
reported results the third in the toss
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is the closing entry see closing entry is
basically a journal end and which is
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done at the end of the accounting period
so this type of entry is posted to shift
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ending to retain earning account from
all the temporary accounts like you know
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you have loss account
gain account expense account revenue
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account so this is done to what we call
as transfer information to the extent to
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the next accounting period so accounting
entries for the transactions are done
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through what we call as the accounting
software and where one doing transaction
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will know he is creating an accounting
entry example like you know creating
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customer invoice accounting entries you
know they basically record all the
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commercial transactions very for now
there is a system of accounting journal
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entries you know how does this go the
first is single entry accounting now the
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term single entry is vaguely used to
define the method of maintaining the
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accounts which can not confirm to strict
principles of the double entry so it is
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not wrong to define into a system the
term single entry does mean that there
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is only one entry there is only one
entry for each transactions so the
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absence of the two folded you can say
that two folded effect of each
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transaction makes it really very
impossible to prepare a trial balance
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and to check arithmetic 'accuracy of
the box of accounts endangering the you
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know a spirit of laxity or providing
inviting frauds of misappropriations
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so that may be the case now the profit
and loss accounts and balance sheet
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cannot be separated due to the absence
of the nominal account okay and hence a
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single entry is not only incomplete but
the final result is also not reliable so
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this system typically tracks only the
what we call as the cash receipts and
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cash disbursements okay and it shows
only those results that are needed to
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construct income statement now there are
some advantages of single entry
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accounting the first one the single
entry system is very simple and less
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expensive second a professional person
is not required to maintain or you can
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see a professional person is not
required to maintain any sort of single
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entry system accounting third it has
what we call as the summary
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or for daily transactions like you know
incomes and expenses now let me talk
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about some disadvantages see the
disadvantage of the single entry is that
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you know there is a lack of data and may
adversely affect a planning controlling
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of the business or target goals second
there is a lack of what we call as
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control on different issues which
company may face and third in case of
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any loss or theft one will not be able
to find out or won't be able to find it
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through this single entry accounting
system so let's take an example of
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single entry system the example of the
entry single entry system is here
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know we have couple of dates income
expenses whether it is inventory on
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salary wherever things have been
recorded it's here so hence the entry of
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the single entry is done oh no each and
every transaction like you know unforced
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April the balance was this expenses this
happened or on this particular lines on
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4th April raw material worth in purchase
and so on and so forth other entries up
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in given so this was the first example
of the single entry system then we have
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a thing called double entry system
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double-entry bookkeeping system so this
is used to make the debit great entry
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system which eventually leads to
creation of the complete of the
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financial statement so according to the
book entry system every transaction has
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two elements one is called the debit
that is when something is going and
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another credit when something is coming
in so in simple language what comes in
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is credit goes out is your debt so this
is the main concept of the double-entry
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system entities of the double-entry
journal entry system first what you will
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need is you will need a complete record
you will need a complete record on this
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let's try and evaluate that now
double-entry system enables the
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businessman to keep a complete
systematic and accurate record of all
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the transactions of detail of any
transaction events can be verified
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at any time right second entertainment
of profit and loss right so the
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systematic record maintained under the
double-entry system enables a business
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to ascertain the results of business
operations for any given period of time
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so the owners can know the profitability
of the business operations periodically
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third is the knowledge of financial
positions so with the help of the real
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and personal accounts the financial
positions of the business can be
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ascertained with accuracy such as this
is done by preparing what we call as the
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balance sheet so under the the
double-entry system every debt has a
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corresponding credit so arithmetical
accuracy the books can be tested by
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preparing a statement called
trial balance is known as trial balance
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and there is no scope of fraud over here
the firm we know is saved from frauds
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and so preparations you know since full
information about all the assets and
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liabilities will be available so there
are tons of details that goes around in
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this particular topic there's no just
one thing but it there are terms of thing
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I'll just give you a short example let's
say you purchase a machine by cash so
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machine is over here is gonna be a debit
case right because that's machine is
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coming it and what is going out that's
cash so that will be credited and every
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entry of the financial system you know
for the same will show something like
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this enough let's say you bought it for
$5,000 so the
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we'll be recorded leaders so that's it
for this particular topic if you have
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