Accounting is the process of recording economic activity and organizing this information in a format to inform owners about financial results. It all begins with the journals and ledgers. The initial entry is recorded in one of many journals and then transferred to the respective ledgers where the data is summed and reported to the management team. This article explains how journals and ledgers relate to each other and how the end results are organized.
The sales journal is the original source entry book (record of daily activity) used in business. It specifically records the daily sales activity and how the sales were paid; i.e. in cash or on account. In general it records activity to the sales, cash, receivables and returns ledgers.
Historically the only two forms of payment were either cash or check. Then credit card payments became very popular in the eighties and today the preferred method is debit. Debit payments are an instantaneous removal of value from the customer’s account and suspended by the banking system until deposited into the business checking account.