Which of the following best explains a journal (or daysheet) in financial accounting?

• A. A report that lists only the company's revenues and expenses.
• B. A chronological record of all financial transactions, showing debits and credits for each entry.
• C. A summary of account balances at the end of an accounting period.
• D. A document used to authorize payments to suppliers.

Answer: (B)

Verified step by step guidance

1. Understand the concept of a journal in financial accounting: A journal is a chronological record of all financial transactions that occur within a business. It is the first step in the accounting cycle where transactions are recorded as they happen.
2. Recognize the purpose of a journal: The journal serves as the primary book of entry, capturing both the debit and credit aspects of each transaction in accordance with the double-entry accounting system.
3. Differentiate a journal from other financial documents: Unlike a report that lists only revenues and expenses, or a summary of account balances, the journal provides a detailed, chronological record of all transactions.
4. Identify the key components of a journal entry: Each journal entry includes the date of the transaction, the accounts affected, the amounts debited and credited, and a brief description or reference for the transaction.
5. Conclude that the correct explanation of a journal is: 'A chronological record of all financial transactions, showing debits and credits for each entry,' as it aligns with the definition and purpose of a journal in financial accounting.