what are the 9 different types of Journal Entries?

  Let us understand, as to, what are the 9 different types of Journal Entries in accounting? How they are relevant in our business while recording the different types of transactions such as sales and purchase of goods and services, cash receipts and cash payments etc.,. This has been explained in simple tactics with a simple diagram to make it easy to understand. 

What is Journal  & Journal Entry in Accounting? Its meaning, definition, nature & scope:

It is the book, where the business transactions are recorded primarily in this book. The entry made in this book is called a journal entry. Journal Entries are used to record the different business transactions that occur and these transactions are recorded in the books of accounts. All the business transactions are first recorded in this book in chronological order or date wise. It is the book, where the business transactions are recorded in a format of debit and credit. 

        Journalising: All the business transactions are recorded in this book in chronological order. The process of recording transactions in this daybook is called journalising. The transactions are recorded in this book as per the accounting principles and standards 

What are the 9 different types of Journal Entries in Accounting?

Journal Entries are used to record the different business transactions that occur and these transactions are recorded in the books of accounts 

They are recorded by following the Double-entry system of bookkeeping. They are recorded in a book called Journal. For each transaction, there are two aspects such as debit and credit aspect. For every debit, there is an equal amount of corresponding credit

There are mainly 9 different types of Journal entries in Accounting such as 

1. Simple Entry

2. Compound Entry

3. Opening Entry

4. Closing Entry

5. Transfer Entry

6. Adjustment Entry

7. Rectifying Entry

8. Reversal Entry

9. Rebook Entry

Let us discuss each one to know as to what they are? how they are relevant in recording transactions of a business. Let see each one to know much more about them.

1. Simple Entry

Simple entries are those that have only two accounts. They have only one debit and one credit in it. Here, only two accounts are affected while recording transactions. One account is credited and the other is debited. For example, let us see this transaction. Robert sold goods for cash amounting to $1000. Here, we have two accounts where one account (cash) is debited and the other (sales)  is credited. 

Illustration for the transaction. Robert sold goods for cash amounting to $1000

Cash A/c  -  Debit  $1000

Sales A/c  -  Credit $1000

2. Compound Entry

Compound Entries have more than two accounts that get affected while recording the business transactions.

Here, two accounts are credited and one account is debited. Even, two accounts may be debited or one account is credited. They are recorded for transactions that are similar in nature and occur on the same day. 

Let us see the Illustration for this transaction. Paid salary $200, electricity bill $100, rent $300.

Salary A/c      -  Debit $200

Electricity A/c -  Debit $100

Rent A/c         -  Debit $300

Cash A/c        -  Credit $600

3. Opening Entry

These are used to record the balances of assets, liabilities, capital, reserves & surplus that are brought forward from the previous year. All the closing balances of assets, liabilities, capital that are shown in the last years' balance sheet are brought forward to the current year using this opening entry. We generally use, "To balance b/d", "By balance b/d" as the transaction type to record these opening balances of assets and liabilities

4. Closing Entry

These are used to close the balances of revenues A/c, incomes A/c, expenses A/c. Generally, all the nominal accounts are closed and transferred to the Trading, Profit & loss account at the end of the financial year. All the incomes & expenses such as sales A/c, incomes earned, rent A/c, salary A/c will be closed and transferred to the Trading A/c, Profit and loss A/c. These expenses and incomes are closed and not carried forward to the next financial year.

5. Transfer Entry

These are used to transfer the amount in one account to another account. They are used, when a wrong booking was made, where a wrong account has been credited or debited. In such a case, such amounts will be transferred to the correct account.

6. Adjustment Entry

They are used to record the assets and liabilities at their correct value. It means they are used to adjust the assets, liabilities, incomes, expenses while preparing the financial statements at the year-end. For example, depreciation is used to show the assets at their true value. Depreciation is calculated and deducted from the assets book value to show its correct value in the balance sheet. Provision for bad and doubtful debts are deducted from the debtors' balance in the balance sheet to show its true balance.

7. Rectifying Entry

They are passed to make corrections in the books of accounts, ledger accounts. Whenever errors take place while booking the transactions in the books of accounts, we will pass rectifying entries to correct them. Errors may be of many types such as error of commission, principal errors, error of omission, compensating errors.

8. Reversal Entry

This is used to reverse any transaction originally booked. This is to nullify the effect of that wrong transaction booked earlier. Thus it would be helpful to reverse any transaction booked wrongly in the books.

Then we will pass Rebook entry to book the transaction correctly in the books.

9. Rebook Entry

This is used to reverse any transaction originally booked. This is to nullify the effect of that wrong transaction booked earlier. Thus it would be helpful to reverse any transaction booked wrongly in the books.

Then we will pass Rebook entry to book the transaction correctly in the books. 

Conclusion

Thus we can conclude, as to, what are the different types of Journal entries in accounting? what they are? why they are so important to record the business transactions in the books of accounts. They are helpful in recording the business transactions to convey the financial performance and position, to maintain different accounts such as debtors, creditors, liabilities, assets accounts. Thus it is important to know these concepts to record the different transactions in different scenarios

Related blogs:

What is Journal? Its features, types, Objectives and uses

What are Ledgers? 

What is Trial Balance?

What are Financial Statements? Its features, types, uses

What is Income Statement (Profit and loss a/c)?

What is Balance Sheet (Position Statement)?

What is Cash Flow Statement?

What is Bookkeeping? Its features, objectives, uses?

What are Subsidiary Books? Its features, types, objectives, uses

What is Single Entry System? Its features, types, objectives, uses

What is Double Entry System? Its features, objectives, uses