What are examples of each special journal?

Accounting becomes one of the important factors in running the company’s operational activities. With the help of accounting, a company can record all transactions in operational activities. You need to know that one important process is often left behind in the accounting process, namely a special journal. To minimize manual time-consuming accounting procedures, you can use accounting software.

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Table of Contents
What is Special Journal?
Types of Special Journal
Purchase journal
Sales journal
Cash receipt
Cash payment
The Benefits
Reduce company financial miscalculations
Simplify the auditing process
Prevent fraud
Disadvantages
Important Points
Recommended Articles

So, how about the full explanation of this specific recording? Check out the following explanation below!

What is Special Journal?
Types of Special Journal
The Benefits
Conclusion

What is Special Journal?

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A special journal is a recording that has been grouped based on the transaction forms. In other words, it has an understanding as a journal that can be made or classified according to the transaction types. In this case, the accountant must identify all transaction forms that occur in the company and record them in a special type of record. This is used by the accountant to record all occurred transactions on a credit basis.

Also read: Introduction to the Concept of Cost Structure

Types of Special Journal

In general, special journals have four types. These types range from purchasing, sales, cash receipts, and cash expenditures types of bookkeeping. So, how is the full explanation of each special journal type? Let’s take a look at the following explanation:

Purchase journal

A purchase journal is a record that makes it easier for accountants to record all types of purchases, such as purchases of goods or non-goods on credit. In this case, the types of purchase transactions include the trade goods purchase, equipment purchase, and other assets on credit.

The presence of that has a function to simplify recording and facilitate the bookkeeping of high-volume transactions into the ledger. At the end of each reporting period, records on the purchase journal will be summarized and posted into the ledger. To manage purchase requests across multiple branches, you can use HashMicro’s purchasing software.

Sales journal

The next type that we are going to talk about is a sales journal. In the case of the type sales is a journal that accountants can use to record all sales transactions on a credit basis. In general, the information stored in this keeping is a summary of the invoices that the company issues to customers, such as transaction dates, account numbers, customer names, invoice numbers, and sales amounts. This type of document has the same function as a purchase journal, which makes it easier to record high-volume transactions on the ledger.

Cash receipt

The presence of this journal can make it easier for accountants to record all transactions related to the cash receipt. Furthermore, cash receipt journals have a function to record transactions that occur on a cash basis. Transactions recorded in cash receipt journals such as sales on a cash basis, debt repayment receipts, purchase returns on a cash basis, and income receipts.

Cash payment

A cash payment journal has a function to record all transactions related to cash expenditure. In this case, it will record all transactions that occur on a cash basis in detail. The transactions included in the cash payment journal are purchases on a cash basis, debt repayment, sales returns, and expense payments. One of the business cash outflow examples is a cash payment for purchase on a cash basis.

The Benefits

The special journal will provide various benefits for accountants. All these benefits certainly will facilitate the company’s operational activities. So, what are the benefits? Here’s the explanation:

Reduce company financial miscalculations

Often a company faces a common problem that is an error in calculating finances. This miscalculation will certainly cause losses for the company. Moreover, miscalculations can also result in a company’s instability which leads to bankruptcy. Therefore, a special journal can make it easier for a company to overcome the financial miscalculation problem. In this case, you can use the financial management system to automate daily business operations

Simplify the auditing process

A company in its operational activities must be able to uphold transparency. One of the operational aspects that uphold transparency is the company finances. The transparency in this means can be done through the auditing process. A special journal can facilitate the company finances and conduct periodic business analysis with the auditing process.

Prevent fraud

A company has the potential for fraud. Of course, this will cause losses for the company. It will help the company overcome this potential problem. This is because special journal recording occurs chronologically. So, financial records will be difficult to change.

Also read: How to Calculate Current Ratio?

Conclusion

A special journal is a journal that can be made or classified by the accountant according to the transaction type. Special journals have various types in the recording process, ranging from purchase, sales, cash receipts, and cash payment journals. Each of these types certainly has a different function. A special journal can also provide various benefits for a company, one of them is to prevent fraud.

Speaking of the company’s accounting activities, HashMicro provides the best solution for your company in improving the efficiency of recording business transactions easily using the Accounting Software. This software comes with the best features. Contact us now to get the best deals and free demos!

Special Journals are all accounting journals in an organization except the general journal. All the transactions of similar transactions are recorded in an organized form that helps the company’s accountants and bookkeepers keep track of all different business activities properly.

There are different types, where some of the commonly used in accounting include the following:

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#1 – Purchases Journal

Purchase JournalPurchase Journals, also known as Purchase Book or Purchase Daybook, are special journals which a Company uses to keep track of all the credit purchases. While Purchase Journal records credit transactions, a General Journal records cash purchases. read more records all the transactions related to the purchase of the goods on credit from the suppliers.

#2 – Purchases Returns & Allowances Journal

It records all the transactions related to the return of goods to the supplier, purchased on credit, or allowances received from the supplier.

#3 – Sales Journal

Sales JournalA sales journal is a type of journal that is used to keep track of a company's credit sale transactions and to maintain and manage the account receivable and inventory account.read more records all the transactions related to the sales of goods by the company to its customer on credit.

#4 – Sales Returns & Allowances Journal

It records all the transactions related to the return of goods back by the customers sold on credit and allowances given to the customers.

#5 – Cash Receipt Journal

Cash Receipt JournalThe cash receipts journal is that type of accounting journal which is only used to record all receipts of cash during an accounting period and works on the golden rule of accounting – debit what comes in and credits what goes out.read more records all the transactions in which the company receives cash, like transactions involving the sale of goods for cash, sale of the company’s assets for cash, and capital investment by the owner of the company in the form of cash, etc.

#6 – Cash Payment Journal

It records all the transactions involving the outflow of the cash from the company and includes the transactions such as cash paid to suppliers, cash paid for the expenses, etc.

Examples

There is a company A ltd which has a large scale business. It maintains the record in the special journals to keep the records organized and in better form. One of them is the sales journal, which the company uses to record all the transactions related to the sales of goods on a credit basis.

When the company sells the goods to its customer on a credit basis, there will be a debit to the account receivable account and a credit to the sales account. So, this transaction will be recorded in the sales journal by debiting the accounts receivable accountAccounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment. They are categorized as current assets on the balance sheet as the payments expected within a year. read more. When the company receives the payment against accounts receivable, the same will be recorded in the cash receipt journal. If there is any return from the customer, then the same will be recorded in the sales returns and the allowances journal.

Advantages

Some of the advantages are as follows:

All the accounting transactionsAccounting Transactions are business activities which have a direct monetary effect on the finances of a Company. For example, Apple representing nearly $200 billion in cash & cash equivalents in its balance sheet is an accounting transaction. read more of a similar nature will be recorded in that particular special journal. As they record all the related transactions in an organized form, this will help the accountants and the bookkeepers keep track of all the different business activities properly.
Generally, in large companies, each of the special journals is handled by separate persons, which makes the person specialized in that area, thereby increasing its efficiency of working and reducing the chances of errors in the bookkeeping.
Companies, where such journals are maintained internal controlInternal control in accounting refers to the process by which a company implements various rules, policies, or procedures to ensure the accuracy of accounting and finance information, safeguard the various assets of the business, promote accountability in the business, and prevent the occurrence of frauds in the company.read more, are better. With such division of the work, the employee’s conflict concerning their responsibilities decreases, and the quality of work increases.

Disadvantages

Some of the disadvantages are as follows:

Important Points

The different vital points are as follows:

Conclusion

They record the specific transaction of the company by categorizing them into different types or groups. This system helps the company maintain the accuracy of the transactions in an organized form. It can also be reviewed by the company later. In case the company does not use this journal. All the transactions would be recorded in the General journal only, and at the later stage, it would become difficult to look at the specific types and nature of transactions.