The narration is the explanation of the entry and facilitates
quick understanding. The length of the narration depends on the complexity of
the transaction and whether management wants the journal itself to contain all
relevant information. Most often narration are in brief.
When more than two accounts are involved in a transaction and the transaction
is recorded by means single journal entry instead of passing several journal
entries, such single journal entry is termed as 'Compound Journal Entry'. A
compound journal entry may also be passed if there are more transactions of the
same nature, taking place on the same date. It may be recorded in the following
a) by debiting one account and crediting two or more
b) by debiting two or more accounts and crediting one
c) by debiting several accounts and crediting several
Example:- Paid Rs. 920 to Mr. Gopal in full
settlement of his account of Rs. 1,000.
Gopal A/c Dr. 1,000
To Cash A/c 980
To Discount received A/c 20
A journal entry by means of which the balances of various assets, liabilities
and capital appearing in the balance sheet of previous accounting period are
brought forward in the books of current accounting period is known as ‘Opening
While passing an opening entry. All those accounts
which denote what the business possesses (assets) are debited and all the
accounts showing amounts due by the business (liabilities) are credited.
Þ If capital is not given,
it can be easily found out by deducting liabilities from assets. Opening
entries are the following:
Account - Dr.
Bank Account - Dr.
Sundry Debtors Account - Dr.
Account - Dr.
To Sundry Creditors Account
To Capital Account
▪ The opening entry is made in the journal. At the end
of the trading period, closing entries are made, the object being to close the