Every business transaction must be recorded. But where should those records be kept?
The first gateway in recording transactions is the general journal, where all inflows and outflows are documented. In most businesses, the double-entry method is the preferred approach because it provides clearer visibility into financial performance.
It refers to a method where every transaction affects at least two accounts:
- One account is debited
- Another account is credited
- And the total debits must always equal the total credits.
Before you start recording your own transactions, let’s first understand what a general journal is, see some examples, and learn how ERP can help you manage it! ⬇️
Also Read: General Ledger vs General Journal, How Do They Differ?General Journal: Definition and Function
Example of a general journal
A general journal is a chronological record of all financial transactions within a company. Through the general journal, every transaction is systematically recorded before being transferred to the ledger.
Understanding the Two Types of Journal
In accounting, there are two main types of journals: general journals and special journals.
- A general journal records all kinds of transactions, especially those that are unusual or don’t happen often, like buying equipment or making adjusting entries.
- Special journals are used for common, repeated transactions such as sales, purchases, or cash payments.
The difference is simple: general journal = all transactions (especially unique ones), while special journals = routine, repetitive transactions.
Also Read: Understanding SKU, The Key to Smarter Stock TrackingFunctions of the General Journal in Accounting
Avoid duplication
Each transaction is recorded only once, clearly and systematically.
Simplify financial reporting
Because all transactions are already organized and documented properly.
Verification tool
Helps ensure that every transaction has supporting documentation.
How to Create a General Journal
Here are the steps to create a general journal:
- Identify the transaction using supporting documents (receipts, invoices, or vouchers).
- Determine which accounts are involved in the transaction.
- Decide the debit and credit positions according to accounting principles.
- Record it in the general journal format, complete with date, description, and amount.
General Journals Made Easier with ERP
In the digital era, many companies no longer record transactions manually. With an ERP (Enterprise Resource Planning) system, the general journal is automatically generated every time a transaction occurs.
For example:
- When creating an invoice, the system automatically records accounts receivable and revenue.
- When creating a vendor bill, the system automatically records expense/COGS and account payable.
With the help of ERP, avoid the common mistakes in entering general journal such as incorrectly placing accounts in debit or credit, recording transactions without supporting documents, all the way to overlooking small transactions that could still affect final reports.
Benefits of General Journals in ERP:
Automation
Reduces human error.
Integration
Every module (sales, purchasing, payroll, inventory) connects directly to the general journal.
Time Efficiency
No need for duplicate data entry.
Real-time data
Financial reports are always up to date.
The general journal is the foundation of accounting, recording every transaction chronologically and systematically. By understanding what a general journal is, learning how to create one, and seeing examples of general journal entries, you can prepare more accurate financial reports.
Today, with ERP systems, recording general journals is faster, automated, and integrated, allowing businesses to focus on strategic decision-making. Take your first step now with Odoo, starting from the buttons below!
