Choose the statement below that correctly explains a general journal.

• A. A general journal only records cash transactions and excludes credit transactions.
• B. A general journal is used exclusively to summarize account balances at the end of the period.
• C. A general journal is a chronological record of all business transactions, showing the accounts debited and credited for each entry.
• D. A general journal contains only adjusting entries made at year-end.

Answer: (C)

Verified step by step guidance

1. Understand the purpose of a general journal: A general journal is a primary book of entry where all business transactions are recorded in chronological order. It includes both cash and credit transactions, as well as adjusting entries when necessary.
2. Analyze the first option: 'A general journal only records cash transactions and excludes credit transactions.' This is incorrect because a general journal records all types of transactions, including both cash and credit.
3. Analyze the second option: 'A general journal is used exclusively to summarize account balances at the end of the period.' This is incorrect because summarizing account balances is the role of a trial balance or financial statements, not the general journal.
4. Analyze the third option: 'A general journal is a chronological record of all business transactions, showing the accounts debited and credited for each entry.' This is correct because it accurately describes the function of a general journal.
5. Analyze the fourth option: 'A general journal contains only adjusting entries made at year-end.' This is incorrect because a general journal records all types of transactions, not just adjusting entries.