Difference between general journal and special journal

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All the transactions in general journal are posted in general ledger whereas in special journals all the transactions are posted in general as well as in personal ledgers. Purchases return journal which is also called purchases return day book is sued to record credit purchases returned to suppliers. Sales return journal which is also called sales return day book is used to record the credit sales returned from debtors. While an accrual-based business will have cash journals, a cash-based business won’t have a sales or purchases journal as a cash-based business only recognizes transactions when cash changes hands. Depending on the size of the business, either all entries are recorded in the general journal or, in the case of a company with many special journals, only adjusting, reversing, or nonroutine entries are booked in the general journal.

  • Because every credit sales transaction is recorded in the same way, recording all of those transactions in one place simplifies the accounting process.
  • Payroll and other disbursements will require their own journals to accurately track transactions.
  • Provides a chronological record of all credit sales made in the life of a business.
  • In its most basic form, a sales journal has only one column for recording transaction amounts.
  • Of course, every purchase in the journal below must credit accounts payable; equipment purchased with a note payable or supplies purchased with cash would not be recorded in this journal.

The sales journal is used to record sales on account (meaning sales on credit or credit sale). Selling on credit always requires a debit to Accounts Receivable and a credit to Sales. Because every credit sales transaction is recorded in the same way, recording all of those transactions in one place simplifies the accounting process. Note there is a single column for both the debit to Accounts Receivable and the credit to Sales, although we need to post to both Accounts Receivable and Sales at the end of each month.

General journal

General journal is used to record such transactions that are not repetitive in nature and for which no special journal is maintained. Any accounts used in the Other Accounts column must be entered separately in the general ledger to the appropriate account. Figure 7.25 shows how the refund would be posted to the utilities expense account in the general ledger. Special purpose ledgers can also be categorized similarly to a general ledger.

  • The source documents for the Sales journal are copies of all invoices given to the debtors.
  • At the end of the period, we would post the totals of  $7,650 credit to cash, the $7,500 debit to accounts payable, and the $150 credit to merchandise inventory.
  • The format and structure of a special journal are similar to any general journal with a tabular form.
  • It will always have a debit to Merchandise Inventory if you are using the perpetual inventory method and a credit to Accounts Payable, or a debit to Purchases and a credit to Accounts Payable if using the periodic inventory method.

On the other hand, routine transactions are recorded in special journals and do not require authorization. Only one posting for the total amount is made to the relevant ledger account at the end of the month or another appropriate period. Using the reference information, if anyone had a question about this entry, he or she would go to the sales journal, page 26, transactions #45321 and #45324.

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Many firms design their specialized journals to meet their particular needs. In small businesses, where transactions occur infrequently, each transaction is recorded in a general journal and then posted to the related accounts in the general ledger. At the end of the month, we would post the totals from the sales journal to the general ledger (Figure 7.19).

Special Journal Vs General Journal

For a refresher on perpetual versus periodic and related accounts such as freight-in, please refer to Merchandising Transactions. 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. (Figure) summarizes the typical transactions in the special journals previously illustrated. Table 7.1 summarizes the typical transactions in the special journals previously illustrated. At the end of the period, the TOTALS only would be recorded in posted directly into the accounts listed with no journal entry necessary.

2 Describe and Explain the Purpose of Special Journals and Their Importance to Stakeholders

” To answer this question, the company would need to review all of the pages of the general journal for nearly an entire month to find all of the sales transactions relating to Mr. Smith. And if Mr. Smith said, “I thought I paid part of that two weeks ago,” the company would have to go through the general journal to find all payment entries for Mr. Smith. Thus, recording all transactions to the general journal makes new wave programs, llc it difficult to find the particular tidbits of information that are needed for one of our customers, Mr. Smith. The use of special journal and subsidiary ledgers can make the accounting information system more effective and allow for certain types of information to be obtained more easily. Entering transactions in the general journal and posting them to the correct general ledger accounts is time consuming.

Special journal

Account numbers are placed in parentheses below the column to indicate that the total has been posted. Companies that frequently make credit purchases of items other than merchandise use a multi‐column purchases journal. For example, the purchases journal below includes columns for supplies and equipment. Of course, every purchase in the journal below must credit accounts payable; equipment purchased with a note payable or supplies purchased with cash would not be recorded in this journal.

Definition of Special Journal

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