What does the general journal record, and how is the ledger divided into the sales, purchases and general ledgers?
Use the general journal for non-routine entries and explain the division of the ledger
A focused answer to the O-Level Principles of Accounts outcome on the general journal and the ledger system. Journal entries with narratives, the uses of the journal, and the division into sales, purchases and general ledgers.
Reviewed by: AI editorial process; not yet individually human-reviewed
Have a quick question? Jump to the Q&A page
Jump to a section
What this dot point is asking
SEAB wants you to use the general journal for non-routine entries (those that do not fit the sales, purchases, returns or cash books) and to explain how the ledger is divided into the sales, purchases and general ledgers. The central insight is that the general journal is the "book of prime entry of last resort" for unusual transactions, and that dividing the ledger keeps customers, suppliers and everything else neatly separated.
The answer
The general journal
The general journal records transactions that do not belong in any of the special journals or the cash book. Each entry shows the account to debit, the account to credit, both amounts, and a narrative (a short explanation). It is used for:
- Opening entries - recording the assets, liabilities and capital when a business starts or its books begin.
- Purchases and sales of non-current assets on credit - for example buying equipment on credit (not goods for resale).
- Correction of errors - adjusting entries to fix mistakes.
- Year-end adjustments - such as depreciation and writing off bad debts.
- Other transfers - for example writing off an irrecoverable debt.
The format of a journal entry
| General journal | Dr $\
| --- | --- | --- |
| Account to be debited | amount | |
| Account to be credited | | amount |
Narrative: a short sentence beginning "being..." that explains the entry.
The narrative matters: it records why the entry was made, completing the audit trail.
Dividing the ledger
The ledger would be unwieldy as one book, so it is split into three:
| Ledger | Contains | Example account |
|---|---|---|
| Sales ledger (debtors) | Personal accounts of credit customers | A customer's account |
| Purchases ledger (creditors) | Personal accounts of credit suppliers | A supplier's account |
| General (nominal) ledger | All other accounts: assets, expenses, income, capital | Sales, Rent, Capital |
This division separates the many personal accounts (customers and suppliers) from the nominal accounts, makes the work shareable among staff, and supports control accounts.
Examples in context
Example 1. Starting the books. When a trader formalises her records, she lists everything the business owns and owes in an opening journal entry: assets debited, liabilities and capital credited, with a narrative. This single entry sets up every ledger account at once, which no special journal could do.
Example 2. Sharing the work. A growing firm splits its bookkeeping: one clerk keeps the sales ledger (customers), another the purchases ledger (suppliers), and a third the general ledger. Because the ledger is divided, several people can work at once, and control accounts can later check each section against its journal totals.
Try this
Q1. State two transactions that would be recorded in the general journal. [2 marks]
- Cue. Any two, such as an opening entry, a credit purchase of a non-current asset, the correction of an error, or a year-end adjustment.
Q2. Give the journal entry for buying office furniture \2,000$ on credit from DeskCo. [2 marks]
- Cue. Debit Office furniture \2,000\ (narrative: furniture bought on credit, a non-current asset).
Q3. State which ledger holds a credit customer's account and which holds the Rent account. [2 marks]
- Cue. A credit customer's account is in the sales ledger; the Rent account is in the general (nominal) ledger.
Exam-style practice questions
Practice questions written in the style of SEAB exam questions on this dot point, with worked answer explainers. The year tag is the paper they imitate, not the source.
Original6 marksShow the general journal entries, with narratives, for: (a) the owner brings a private motor vehicle worth \12\,000\ on credit from OfficeCo.Show worked answer →
(a)
| General journal | Dr $\
| --- | --- | --- |
| Motor vehicle | 12,000 | |
| Capital | | 12,000 |
Narrative: being a private motor vehicle introduced into the business by the owner as additional capital.
(b)
| General journal | Dr $\
| --- | --- | --- |
| Office equipment | 4,000 | |
| OfficeCo | | 4,000 |
Narrative: being office equipment purchased on credit from OfficeCo (a non-current asset, not goods for resale).
Markers reward the correct debit and credit, the journal layout with both amounts, and a clear narrative explaining each entry.
Original5 marksExplain the difference between the sales ledger, the purchases ledger and the general ledger, and give one account found in each.Show worked answer →
The ledger is divided to keep it manageable and to separate personal accounts from the rest:
- Sales ledger (debtors ledger) - holds the personal accounts of credit customers, for example the account of a customer named Lim.
- Purchases ledger (creditors ledger) - holds the personal accounts of credit suppliers, for example the account of a supplier named Goh.
- General (nominal) ledger - holds all the remaining accounts: assets, expenses, incomes and capital, for example the Sales account, the Rent account or the Capital account.
Markers reward the correct description of each ledger (customers, suppliers, everything else) and one valid account in each.
Related dot points
- Identify the source documents for common transactions and explain their role in the accounting process
A focused answer to the O-Level Principles of Accounts outcome on source documents. The invoice, credit note, receipt, cheque counterfoil and others, and how each begins the recording process in the books of prime entry.
- Prepare the sales, purchases and returns journals and post their totals to the ledger
A focused answer to the O-Level Principles of Accounts outcome on the day books. Recording credit sales, purchases and returns in the journals, and posting the individual entries and period totals to the ledgers.
- Prepare a two-column and three-column cash book, including cash discounts and contra entries
A focused answer to the O-Level Principles of Accounts outcome on the cash book. The two-column and three-column cash book, cash discounts allowed and received, contra entries, and posting the discount totals.
- Correct errors using journal entries and show the effect of corrections on profit
A focused answer to the O-Level Principles of Accounts outcome on correcting errors. Writing the correcting journal entry with a narrative, and tracing the effect of each correction on the reported profit.