Business transaction is an event which affects a business financially or in other words it causes a change in its assets, liabilities and/or equity. Any event which does not affect the business financially is not recorded in accounting system.
Business transactions are recorded in a special type of register called journal.
Journal Entry Format
Each individual record in a journal is called journal entry. Journal entries are passed according to the principle of the accounting equation and it obeys the debit credit rule. Entries made
A typical journal entry displays the following information:
- Date of transaction
- Names of accounts involved in the transaction
- Debit and credit columns for entering dollar amounts
The format of a typical journal entry is shown below: