A book of original entry represents a physical location where accountants enter financial transactions. These books include registers, journals, and ledgers, though other items may be a book of original entry. Accountants use these books to separate business transactions by type. Each book allows accountants to have accurate records for many transaction types and create specific reports using this information. Knowing which book to use and understanding its importance are essential when recording and reporting a company’s financial information.
A register is not necessarily a classic term for a book of original entry. Though private companies may not use these books frequently, public or government organizations may have more use for them. Each register links to a fund, which the public organization uses to pay for specific items. General use, payroll, maintenance, and special projects are a few common funds that may have accounting registers. Public organizations use accounting registers for fund accounting because appropriated funds are unable to have any use outside of their intended purpose.
Journals are typically among the most common books of original entry. An accounting journal provides a chronological record for business transactions. Accountants record each transaction using the date of occurrence, which provides the chronological history for these transactions. Journals include cash receipts and disbursements, general transactions, payroll, and other similar types as needed by the company. The journals provide a background for the creation of accounting reports and statements.
The general ledger is perhaps the most important book of original entry in accounting. The ledger contains the aggregate total from each journal in use by the company. It is the primary source for creating reports and reviewing information that relates to business activity. This book is also subject to external audit, with auditors sourcing the information from the ledger to the journals. The aggregate totals in the general ledger must match each journal in order for the company to properly adhere to national accounting principles.
Accounting principles typically allow a company to create and use whichever books of original entry they need for recording business transactions. The main standards companies must follow include using debits and credits for each entry and showing that all debits and credits are equal in total. These standards are the inherent principles in double-entry accounting, the main accounting method companies use to record transactions. The use of registers, journals, and ledgers meet these requirements. Each transaction often affects two or more of these books of original entry.