Specialized Journals
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Special journals (in the field of
accounting Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
) are specialized lists of
financial transaction A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment. Any transaction involves a change in the status of the finances of two or more businesses or individuals. A ...
records which accountants call
journal entries A journal entry is the act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company's debit and credit balances. The journal entry can consist of sev ...
. In contrast to a
general journal A general journal is a daybook or subsidiary journal in which transactions relating to adjustment entries, opening stock, depreciation, accounting errors etc. are recorded. The source documents for general journal entries may be journal voucher ...
, each special journal records transactions of a specific type, such as
sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in r ...
or
purchases Purchasing is the process a business or organization uses to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly betwee ...
. For example, when a company purchases merchandise from a vendor, and then in turn sells the merchandise to a customer, the purchase is recorded in one journal and the sale is recorded in another.


Types of special journals

The types of Special Journals that a business uses are determined by the nature of the business. Special journals are designed as a simple way to record the most frequently occurring transactions. There are four types of Special Journals that are frequently used by merchandising businesses: Sales journals, Cash receipts journals, Purchases journals, and Cash payments journals.


Sales journal

Sales journal A sales journal is a specialized accounting journal and it is also a prime entry book used in an accounting system to keep track of the sales of items that customers(debtors) have purchased on account by charging a receivable on the debit side of ...
s record transactions that involve sales purely on credit. Source documents here would probably be invoices. Provides a chronological record of all credit sales made in the life of a business. Credit sales are transactions where the goods are sold and payment is received at a later date. The source documents for the Sales journal are copies of all invoices given to the debtors. Double entry Accounting is achieved by: * Debit – debtors account with value of sales (increasing a current asset) * Credit – sales account with total amount (increasing income) Choose credit sales journal if this stock is then on-sold to customers who will pay later. The people/organizations here are known as debtors. Collectively, all these accounts that are to be paid to us by our customers are known as assets.


Cash receipts journal

A
cash receipts journal A Cash receipts journal is a specialized accounting journal and it is referred to as the main entry book used in an accounting system to keep track of the sales of items when cash is received, by crediting sales and debiting cash and transactions r ...
(CRJ) records transactions that involve payments received with cash. Source documents would probably be receipts and cheque butts. The CRJ records the cash inflow of a business. Discount allowed is an expense as the discount allowed is the cost to the seller of obtaining an inflow of cash from a debtor weeks earlier than would be the case.


Expense journals


Purchases journal

Purchases Journals record transactions that involve purchases purely on credit. Source documents are invoices. For instance, the purchase of inventory on credit is recorded in the purchases journal.


Cash payments journal

Cash Payments Journals record transactions that involve expenditures paid with cash and involves the cash Source documents are likely receipts and cheque butts. The CPJ records the cash outflow of a business. If the owner of a business withdraws cash from the business an entry is made in the CPJ. Discount received is the cash discount received by a purchaser, it is an income item for the purchaser.


Source documents

When a transaction occurs between a business and an external party, a source document will usually be created. Source documents are business forms that provide evidence of each transaction and give the details that are entered later into one of the journals in a computer accounting system. Some computer systems, such as payroll systems, also generate transactions that are recorded in one or more journals, but without paper source documents. * ''Receipt'' when a business receives money or cheques over the shop counter it will usually issue a receipt. A receipt is a document that acknowledges that money or cheques have been received. * ''Check book stub'' * ''Invoice'' includes business name (sellers) and address,
invoice An invoice, bill or tab is a commerce, commercial document issued by a sales, seller to a buyer relating to a sale transaction and indicating the product (business), products, quantities, and agreed-upon prices for products or Service (economic ...
number, ABN, buyer details, date, description of goods purchased, quantity, unit price, amount (per item x quantity), total price and
GST GST may refer to: Taxes * General sales tax * Goods and Services Tax, the name for the value-added tax in several jurisdictions: ** Goods and services tax (Australia) ** Goods and Services Tax (Canada) ** Goods and Services Tax (Hong Kong) **G ...
. An invoice is a document that records the details of a credit sale of
inventory Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the shap ...
. The origin of the invoice is either delivered with the goods or sent separately to the customer. A number of copies are kept by the seller. * ''Delivery note'' is a document that sets out the type and quantity of the inventory delivered to the purchaser. When the inventory arrives at the premises of the purchaser, the delivery note is signed by the purchaser and is evidence that the goods ordered have been delivered. A copy is kept by the seller. * ''Purchase order'' * ''Purchase requisition'' * ''Credit note'' is a document issued by a seller that acknowledges that a customer is entitled to receive a reduction in the amount owing on goods purchased on credit. Folio Number: Every page of a journal is numbered. This number is known as a folio number. The folio number is used as a cross reference between the journal and the ledger accounts. The use of folio numbers makes it easy to refer back from the ledger account to the journal entry or forward from the journal entry to the ledger account. In addition, folio numbers are a check that all journal entries have been recorded in the ledger system. Each ledger account has a folio number column. The name and page of the journal from which the ledger entry came is recorded in the folio number column. Each journal has a folio number column. The number of the ledger account to which the journal entry was posted is recorded in the folio number column of the journal. Cash money, eftpos, cheques, credit cards. Receipts and payments. Credit sale of inventory on credit Purchases. Cash Journals record items sold or purchased with cash and they also record income received (debtor payment, interest) and daily expenses. If the transaction is of a cash nature, you must be convinced that money/cheque/credit card was also exchanged at the time that the good or service was exchanged. Credit Journals record purchases or sales on credit. If the transaction is of a credit nature, you will assume that the cash will be exchanged after the exchange of the good or service. At this stage, these will only be concerned with your firm acquiring stock and the selling of that stock to customers who will pay later.


Format of special journals

In the
general journal A general journal is a daybook or subsidiary journal in which transactions relating to adjustment entries, opening stock, depreciation, accounting errors etc. are recorded. The source documents for general journal entries may be journal voucher ...
, transactions are recorded in several lines (see Figure 1), and each transaction is posted to the general ledger separately. For example, if fifty sales on account were made during one day, fifty ledger postings would have to be made to three general ledger accounts: Accounts Receivable, Sales, and Sale Tax Payable. In special journal, transactions are recorded in a single line, and the format of the journal made it possible to post only the total amount for each account to the general ledger. For example, if fifty sales on account were made during one day, only the total amount for Accounts Receivable, Sales, and Sales Tax Payable were posted to the general ledger. Thus the posting process is more efficient. Figure 2 shows the example formats of the Special Journals. SALES JOURNAL CASH RECEIPT JOURNAL PURCHASES JOURNAL CASH PAYMENTS JOURNAL


References

Heintz, James A. and Parry, Robert W. Jr. (2008). College Accounting (19th Edition) P440-459. Thomson South-Western. {{ISBN, 978-0-324-37616-6 Accounting journals and ledgers