Which of the following is always recorded in the general journal?

Question: Which of the following is always recorded in the general journal?

If you are studying accounting, you may have encountered the term "general journal". A general journal is a book or a document where all the transactions of a business are recorded in chronological order. The general journal is also known as the book of original entry, because it is where the transactions are first recorded before they are posted to the ledger accounts.

But what kind of transactions are recorded in the general journal? The answer is: any transaction that does not belong to a special journal. A special journal is a journal that is used to record a specific type of transaction, such as sales, purchases, cash receipts, or cash payments. Special journals are designed to simplify and speed up the recording process, and to reduce errors.

So, which of the following is always recorded in the general journal?

- A) Sales of merchandise on credit

- B) Purchase of equipment for cash

- C) Payment of rent for the current month

- D) Adjustment of prepaid insurance at the end of the period

The correct answer is D. Adjustment of prepaid insurance at the end of the period is always recorded in the general journal, because it is not a transaction that belongs to any of the special journals. Adjustments are made at the end of an accounting period to update the accounts and reflect the correct balances. Adjustments are usually related to accruals, deferrals, depreciation, or inventory.

Sales of merchandise on credit (A) are recorded in the sales journal, purchase of equipment for cash (B) are recorded in the cash payments journal, and payment of rent for the current month (C) are recorded in the cash payments journal as well. These transactions are all examples of transactions that belong to special journals.

The general journal is an important part of the accounting system, and it is essential to understand its purpose and function. By recording transactions in the general journal, you can ensure that they are properly documented and classified, and that they can be easily traced and verified.

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