This week’s episode examines the second book of historical bookkeeping, the Journal.
The journal turns business transactions into debits and credits, reflecting the flow of money through the categories of accounting, Assets, Liabilities, Equtiy, which is composed of Revenue and Expeneses, over time.
The journal is where accounting rules are applied, determination of when revenue is earned or unearned, claims are valid or should be written off manufacturing or shipping are complete. It is where the bookkeeper or accountant makes key determinations about the status of each business event.
Our systems today still create journals; often the process is not very visible, but it is just as demanding and critical.
This is Episode 125 of Conversations with Kip, the best financial system vlog there is.