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DTM 40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY
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BOOKS OF PRIME ENTRY
3.0 Journal and Ledger Definition
 JOURNAL
o Journal is a sheet in which all business transaction entries are recorded in
chronological order.
o Journal can be categorized as:
1. General journal – basic journal used to record all business transactions that
cannot be recorded in cash book or special journal.
2. Special journals – used to record a specific type of transaction only.
Examples:
o Purchase journal
o Sales journal
o Purchase returns journal (returns outwards journal)
o Sales returns journal (returns inwards journal)
o Journal entries must be posted to the ledger of related account based on the
double-entry system.
o Journal is a sheet in which all business transaction entries are recorded in
chronological order.
 LEDGER
o A ledger is the principal book for recording and totaling economic transactions
measured in terms of a monetary unit of account by account type, with debits
and credits in separate columns and a beginning monetary balance and ending
monetary balance for each account.
o All ledger’s account must be balanced before a trial balance is prepared.
o All ledger’s account is balanced by comparing the total debit amount with
the total credit amount, and determining which amount is larger.
o Types of ledgers:
 Subsidiary account
- Account receivable (debtors)
At the end of this chapter, students should be able to:
 Demonstrate mastery of knowledge and understanding of a journal
 Practice the methods of recording in General journal based on hospitality
industry activities
 Practice the methods of recording in special journal based on hospitality
industry activities
 Demonstrate mastery of knowledge and understanding of Cash Book
LEARNING OUTCOMES

DTM 40123 PRINCIPLES OF ACCOUNTING FOR TOURISM & HOSPITALITY
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- Account payable (creditors)
 Non-subsidiary account
- Real accounts
 Liabilities & Owner’s equity
 Assets:
a) Current assets. Eg: cash, bank, and account receivable
b) Non-current assets: Eg: Building, land, motor vehicle
- Nominal account
 Expenses. Eg: Discount allowed, rent, salaries
 Revenue. Eg: Commission received, discount received, rent
received.
 The Source Documents Used in the Business Reporting
Book of Original Entry Transaction Recorded
Purchases Journal Credit purchases of goods
Sales Journal Credit sales of goods
Returns inwards (Sales returns) Journal Returns of sales
Returns outwards (Purchase returns) Journal Returns of purchases
Cash book (DR)
Cash inflow or receipts
Cash book (CR)
Cash outflow or payment
General Journal
ALL OTHER transactions that
cannot be recorded in special
day book, cash book or petty
cash book.
THE ACCOUNTING EQUATION
Also called as the balance sheet equation , it represents the relationship between the assets,
liabilities, and owners' equity of a business. The equation shows that the value of a
company's assets always equals the sum of its liabilities and owners' equity.