1. Journal:

Journal is the prime book in which transactions are entered first time from a source document. In other words, it is the book used for making primary record of day-to-day transactions chronologically. Recording of transactions in the journal is known as “Journalizing” and the recorded transactions are called journal entries. It is also called “Book of Original Entry or Book of Prime Entry”. A specimen form of a journal is given below.

2. Narration:

After entering each transaction in the journal, a brief explanation is provided below. This is called narration.

3. Account:

An account is a classified summary of transaction relating to a change in a particular item during a particular period.

4. Ledger:

A ledger is a collection of all accounts debited or credited in journals. The ledger is a book of second entry or final entry because transactions first entered in journal are finally incorporated in the ledger. It is also called “the Main or the Principal Book of Account of a business. The process of transferring journal entries into ledger is called “posting”.