Glencoe Entrepreneurship Finance Practice Exam

The main idea here is understanding how transactions are captured in accounting. A journal is the place where every business transaction is recorded in chronological order, with dates, descriptions, and the amounts showing both the debit and credit—like a diary that notes what happened and when. This initial recording is why the journal is described as the financial diary of the business: it preserves the complete, time-stamped history of all financial events before they move on to ledgers for posting. Accrual basis and cash basis are not about recording in a diary. They describe when revenues and expenses are recognized: accrual recognizes them when earned or incurred, and cash basis when cash changes hands. The term “general journal” is a type of journal, but the broader and more classic term for the diary-like record of all transactions is simply the journal.