TABLE OF CONTENT

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Content
No. No.

1 Golden Rules Of Journal Entry In Accounting 5

2 What Are The Basics Of Journal Entry? 6

3 What Goes Into The Accounting Journal Entry? 6

4 Examples Of Journal Entries 7

5 What Is A Journal Entry In Accounting? 7

What Are The Key Components Of A Journal

6 8
Entry?

How To Decide Which Account To Debit And

7 8
Which Account To Credit In Journal Entries?

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 Can You Explain The Double Entry Accounting
8 9
System?

What Is The Difference Between Journal Entry &

9 9
Ledger Entry?

10 How Do You Handle Errors In Journal Entries? 9

11 What Is A Compound Journal Entry? 10

Describe a situation Where You Created A

12 10
Complex Journal Entry In A Previous Role.

What Is A Contra Account, and How Is It Used In

13 10
Journal Entries?

14 What Is The Journal Entry For Depreciation? 10

15 What Is The Journal Entry For Bad debts? 11

16 What Is The Journal Entry For Prepaid Expenses? 12

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 What Is The Journal Entry For Accounts
17 12
Receivable?

18 What Is The Journal Entry For Accounts Payable? 13

19 What Is The Journal Entry For Sales? 14

20 What Is The Journal Entry For Expenses? 14-15

What Is The Journal Entry For Deferred

21 15-16
Revenue?

22 What Is The Journal Entry For Fixed Assets? 16

What Is The Journal Entry For Bills For

23 17
Exchange?

24 What Is The Journal Entry For Petty Cash? 17-18

What Is The Journal Entry For Dividend

26 18-19
Declaration?

What Is The Journal Entry For Redemption Of

27 19
Debentures?

4
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 Golden Rules Of Journal Entry In
Accounting
If you want to follow the golden rules of Journal entry, you have to follow
certain processes or rules. Journal entries questions and answers for
interviews are numerous and many interviewers ask the golden rules of
accounts in most cases.

TYPE OF ACCOUNT DEBIT CREDIT

Personal Account The Receiver The Giver

Real Account What Comes In What Goes Out

Nominal Account All Expenses and Losses All Incomes and Gains

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 What Are The Basics Of Journal
Entry?
A Journal entry is a record of the business transactions in your business’s
books. Furthermore, for every transaction at least two journal entries you
need to make. However, all the transactions can create lots of problems in
your industry. There are certain things you need to make your choices
while meeting your requirements with ease. Additionally, you need to
understand the basics of journal entries to meet your requirements with
ease.

There are certain steps you need to follow:-

How much cash does the business have?

How much money does it owe?
The value of the business itself.
What does it own?
How is tax treated?

What Goes Into The Accounting

Journal Entry?
Each accounting journal entry should have the following:-

The reference number and the entry date of the journal entry should
be there to complete the entry.
A column you must maintain to know what accounts are affected.
Columns for the debit and credit accounts must be maintained.
A footer line with a brief description must be the main reason for the
entry.
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 Examples Of Journal Entries
Shyam started a business with cash of Rs 6,00,000.

Shyam started a business with cash of Rs 6,00,000.

Journal Entries Questions And

Answers For Interviews
Students often feel nervous when some common journal entries
questions and answers come to their plate in the interview. So, to get over
from this situation let’s analyze some important questions about it.

1. What Is A Journal Entry In Accounting?

A journal entry is an initial recording of all the financial transactions in the
entire accounting system. It comprises of accounts affected, date, and
amounts debited and credited. Additionally, you will also receive a brief
description of the transactions. Furthermore, journal entries will help you
to ensure accurate record keeping and it will serve as the basis for
developing all the financial transactions.
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 2. What Are The Key Components Of A Journal Entry?

There are several key components of a journal entry system. Some of

the key components of the journal entry system are as follows:-

Date.
Accounts.
Debit and credit Amounts.
Narration and description.

3. How To Decide Which Account To Debit And Which

Account To Credit In Journal Entries
You need to decide which account to debit and which account to credit
depending on the type of transactions and account nature. This comprises
asset, liability, equity, revenue, or expense). There are certain basic rules
of thumb here.

Assets and expenses increase with debits and decreases with credits.
Liabilities, revenues, and equities increase with credits and decrease
with debits.

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 4. Can You Explain The Double Entry Accounting
System?
The double-entry accounting system consists of the principle that every
financial transaction has equal as well as opposite effects. This is the debit
and credit equation to meet your needs. Assets = liabilities + Equity. Thus
it can keep things balanced. However, each transaction is recorded in two
accounts thus making it easier to track all the financial health.

5. What Is The Difference Between Journal Entry &

Ledger Entry?
A journal entry is an initial record of the transaction while the ledger entry
is one of the subsequent classifications of the transaction. That too comes
in an individual account. Once all the transactions are there in the journal
they appear in the ledger. Thus it organizes entries by account thus it
helps to track balances.

6. How Do You Handle Errors In Journal Entries?

If any kind of errors are before posting then it is corrected in the journal
itself. If it is found after posting then journal entries adjustment of
accounts are affected. For example, if Rs 500 is mistakenly entered as a
credit in place of a debit then an additional Rs 1000 can be entered as a
debit to correct the initial error. This will reverse the initial entry effect.

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 7. What Is A Compound Journal Entry?
In most cases, a compound journal entry is a transaction that affects more
than two accounts. It involves when a company pays multiple expenses all
at once. However, you must get through the process to have a better idea
of it.

All the revenues and expenses are recognized in the correct period with
proper compliance with a matching period. Additionally, this can make
things work perfectly well in your favor. Unearned revenue and
depreciation are some of the core examples of compound journal entries.

8. Describe a situation Where You Created A Complex

Journal Entry In A Previous Role.
This question is relevant to the interview experience so the response
should focus on real examples. The candidate should explain the purpose
of the entry, any challenges encountered, and the accounts involved.

9. What Is A Contra Account, and How Is It Used In

Journal Entries?
A contra account offsets the balance related to the account. Accumulated
depreciation is one of the examples of it. This is a contra-asset account
that reduces the balance of an asset account. Contra accounts are
credited to reduce assets or debit to reduce liability.

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 10. What Are The Journal Entries For Depreciation?
The basics for journal entry depreciation are to debit the depreciation
expense account and to credit the accumulated depreciation account. It is
one of the common journal entries questions and answers for
depreciation of assets.

Purpose of Journal entries for depreciation

The main purpose of depreciation journal entries is to properly record the
value and the cost of the assets over their useful life.

Example

11. What Is The Journal Entry For Bad debts?

Before reading the journal entry for Bad Debt, it is essential to know what
bad debt is. The simple answer to this question is that in a fiscal period
when a company prepares the financial statements, it needs to know the
portion of the collectible receivables it believes to be uncollectible.

Purpose of Journal entries for bad debt

Recording bad debt expenses on any financial statement helps you lower
all accounts receivables to display accurate income.

Example

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 12. What Is The Journal Entry For Prepaid Expenses?
A prepaid expense in most cases is paid in advance. However, recurring
expenses like insurance and rent can be paid for one-time payments. It
covers the cost of expenses for several months. As it is one of the most
journal entries questions and answers.

Purpose of Journal entries for prepaid expenses

Journal entries for all the prepaid expenses are important to ensure that
business financial statements accurately reflect all its financial condition.

Example

13. What Is The Journal Entry For Accounts Receivable?

Accounts receivable are the assets in the seller’s books as the customer
owes the sum of money against such goods. Trade receivables are
maintained debtor-wise thus allowing businesses to manage overdue sales
as well as non-payments.

Purpose of Journal entries for Accounts receivable

Accounts receivable journal entries’ main purpose is to track and record

the company’s sales to customers on credit.

Example

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 14. What is The Journal Entry For Accounts Payable?
Accounts payable as per the accounting terms that are used to describe
the money owed to the vendors or the suppliers for the services brought
on credit. The sum of any or all outstanding payments is owed by one
organization to its suppliers. Journal entries questions and answers
encircles accounts payable entries with utmost priority.

Purpose of Journal entries for Accounts payable

The purpose of accounts payable journal entries is to record all the

transactions of the company for creditors. Those who have purchased
goods and services on credits.

Example

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 15. What Is The Journal Entry For Sales?
Journal entries for sales are easy to use and describe so, you must go
through the complete process of it. Some of the common journal entries
for sales are as follows:-

Purpose of Journal entries for Sales

In most cases, the sales journal is used to record the company’s

receivables such as credit sales for goods or services.

Example

Journal entry for sales (Goods Sold To Nupur In Credit)

16. What Is The Journal Entry For Expenses?

Journal Entries for all the expenses help to keep the records for all the
general ledger accounts. It helps you to track the information for business
expenses. The date on which they incurred and how much the expense
cost here matters a lot. Expense calculation method is one of the
important journal entries questions and answers.

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 Purpose of Journal entries for expenses

The objective of recording expenses through journal entries is to

accurately record all the financial transactions. This will help the
businesses to maintain compliance with accounting standards and
regulations.

Journal entry for expenses related to office supplies

17. What Is The Journal Entry For Deferred Revenue?

Recording all the deferred revenue means generating a debit to your

assets and credit to all your liabilities. As all the deferred revenue is
recognized. It debits all the deferred revenue accounts and it also credits
all the income statements.

Purpose of Journal entries for deferred revenue

The purpose of the journal entries expenses is to record accurately all the
financial transactions. As it will help the business to maintain compliance
with accounting standards and regulations. Journal entries questions and
answers will help you to sort out revenue expenses in proper order.

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 Journal entry for deferred revenue expenditure of Rs 1200
subscription spread out across a year

18. What Is The Journal Entry For Fixed Assets?

Journal Entry for fixed assets will help you maintain the record of all
transactions in the balance sheet. We debit the asset accounts for all the
fixed assets as we have added value to our fixed assets. Fixed asset
recording is one of the common journal entry questions and answers for
the user.

Purpose of Journal entries for fixed assets

Fixed assets journal entries record the acquisition, disposal of fixed assets,
and depreciation. It helps to maintain long-term assets like equipment,
machinery, and buildings.

Journal entry for Purchase of fixed assets to accounts payable

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 19. What Is The Journal Entry For Bills For Exchange?

The drawer is the person who draws and makes the bills and sends them
to the drawee or the payer for the acceptance of the bill. Once this bill is
accepted it becomes the Bills receivable for the drawer and Bills payable
for the drawee. It is one of the common journal entries questions and
answers.

Purpose of Journal entries for Bills Of Exchange

The main purpose of Journal entries for bills of exchange is to get the
details of transactions and how it affects accounts and balances.

Journal Entry For the issue of Bill

20. What Is The Journal Entry For Petty Cash?

Whenever your petty cash accountant puts the money in the Petty cash
fund they must make journal entries in your books. Additionally, it is
essential for accurate bookkeeping of your accounts. An entry in the Petty
Cash account must show a decrease in cash account and an increase in
your petty cash account. The petty cash settlement is one of the common
journal entries questions and answers.

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 Purpose of journal entries for petty cash

The main purpose of journal entries of Petty Cash is to record all the
minor transactions that affect the business requirements.

Example

21. What Is The Journal Entry For Dividend Declaration?

A dividend declaration is one of the formal actions often taken by the
board of directors about the time it will be paid to shareholders. It is an
accounting record of all dividend declarations. This is used to record the
company’s liability to pay the dividend. Journal entries questions and
answers preparation will become easier for you once you maintain the
dividend declaration process.

Purpose Of Journal Entry For Dividend Declaration

The main purpose of dividend declaration is to record a company’s

liability to make payments of dividends to its shareholders. Journal
entries questions and answers also encircle the purpose of the entry as
well.

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 Journal Entry For Dividend Declaration

22. What Is The Journal Entry For Redemption Of

Debentures?
Repayment of the debentures to all the debenture holders or the
discharge of the liability on the account of any debentures is known as
redemption of debentures.

Purpose Of Journal entries for redemption of debentures

The main purpose of the redemption of debentures is to record all the

repayments of the debt of the company to its debenture holders.

Debentures issued at par and redeemed at par

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