Q6: Now that accounting is computerised, do we still use journals and ledgers?

A:

Even though we no longer use physical books for journals and ledgers, the concepts of journals and ledgers are still used ‘behind the scenes’ in our accounting computer packages.

In the days when bookkeeping involved physical paper books, transactions were first entered into the journal and then carefully posted (or transferred) into the ledger. With the widespread use of computers, transactions are now entered only once and they are automatically (and digitally) posted in the various accounts in a firm’s ledger. Indeed, the words ‘journal’ and ‘ledger’ are being used less and less as we no longer see bookkeeping as involving keeping a daily journal or journals of various transactions and a separate series of accounts for a range of different aspects of a firm’s business. We are now recording transactions digitally into a series of accounts and we can look at this ‘raw data’ in all sorts of different ways. Nevertheless, in these accounting software packages financial records are entered into firms’ accounts based on a few key ideas and concepts that influence and affect the way we view these transactions and the economic and business realities of the firms they represent. And two of these ideas are the ideas of journals and ledgers.