Subdivision of Journal
A) Special Journal
B)
General Journal
(i) Types of Special Journal
Special Journal is sub-divided into following
parts:
1) Cash Book / Journal 2) Purchase Book 3) Sales Book
4)
Purchase Return Book 5) Sales Return Book A
1) Cash Book
All Cash Transactions are recorded here. Whether Cash
received or paid is recorded in this book.
2) Purchase Book
Here we record all those Business Transactions which are related
to goods bought on Credit. In such types of business transactions, Cash is not
involved in it. So, these purchases are known as Credit Purchases.
3) Sales Book
Here we record those business transactions which
are related to Goods Sold by business to its customers on Credit Basis. Our
Customers made payment for the goods sold in future date. These Sales are known
as Credit Sales as, customers do not pay Cash at time of transaction. Instead,
they will make payment in future time period.
4) Purchase Return Book
Those Business Transactions which are related to
Goods purchased by the business are returned to its suppliers due to some
special reasons like defective materials, etc. are recorded in this Purchase
Return book or Journal.
5) Sales Returns Book
In this book, we record those
business transactions which are related to goods sold by our business to our
customers but the customers are not satisfied with the quality of goods sold to
them.
You can Read the article about Accounting Terms for more details about Purchases Returns and
Sales Returns.
It is the part of Main Cash Book. It is used to main small amount Cash Payments. Cash is needed to pay expenses incurred on daily basis. In Larger Organizations, it is not easy to maintain heavy amount of Cash Transactions, so in order to reduce the burden of Larger and Smaller amounts of Cash Transactions in Main Cash Book, Petty Cash Book is prepared which is kept by the Cashier under the guidance and control of Chief Cashier to record Small amount of Cash Payments in this book.
In the Second type of Journal, we
record those Business Transactions which are occurred once or twice in the
Accounting Period of the Business. These Transactions include Purchase of
Office Equipment, Purchase of Land and Building, Bad Debts, Accumulated Depreciation, Outstanding Expenses, etc., are recorded in General Journal.
Why Subdivision of Journal is Made?
Because under Double Entry Bookkeeping System, there
are large numbers of business transactions and especially in case of Cash
Transactions that occur frequently in daily business life, it becomes very
difficult to record these bulk transactions in one Book. So Separate Journals
are made.
Advantages of Subdivision of Journal
1. Bookkeepers can easily record business transaction with
accuracy.
2. Errors, Mistakes and Frauds can be easily prevented,
detected and corrected.
3. Accounting Records can be presented in a
better way to make Financial Statements of the Business.
Comments