In English, the word diary has a synonym called ‘Journal’.
Journal, in accounting, is also the name of a book where we record our transactions daily so that by the end of the year, we can analyse the profitability and stability of our business through the financial statements we discussed earlier.
If we were to properly define journal:
“Journal is a book of original entry where business transactions are recorded first of all, in a chronological (day-to-day) order.”
If Financial Statements are the end goal of accounting, Journal is its starting point.
The journey or, the process which begins from Journal and ends at Financial Statements in order to assess the profitability and stability of my and your business is formally referred to as the ‘Accounting Process’.
Moreover, since this process takes place repeatedly during the life of a business, it is also referred to as the ‘Accounting Cycle’, similar to the ‘Water Cycle’ where the evaporation of water and the rainfall from clouds occur repeatedly thus maintaining the water levels.
The journey or, the process which begins from Journal and ends at Financial Statements in order to assess the profitability and stability of my and your business is formally referred to as the ‘Accounting Process’.
Moreover, since this process takes place repeatedly during the life of a business, it is also referred to as the ‘Accounting Cycle’, similar to the ‘Water Cycle’ where the evaporation of water and the rainfall from clouds occur repeatedly thus maintaining the water levels.
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