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Special journals are used to record specific business transactions, such as wages, sales, purchases, income, and expenses. They are posted to the company ledger at the end of the month and used to create balance sheets. Payroll, sales, cash receipts, and cash disbursement journals are common types of special journals.
A special journal is part of a company’s accounting ledger that represents specific business transactions. Historical accounting books consisted of paper books and columns. The general ledger included all of a company’s non-specialized transactions, together with the totals for each individual ledger or special journal. In today’s business environment, computerized accounting software is the modern day representation of historical accounting books. Accounting software packages are based on the same accounting principles as using a general ledger and special or individual journals for reporting financial information.
Special accounting journals are commonly used to record a company’s wages, sales, purchases, income, and expenses. Each special journal consists of specific accounts that are used to post specific individual financial transactions. The total for each journal is usually posted to the company ledger at the end of the month. Balance sheets are then created using totals from the general ledger.
Payroll journals include all information related to payments made to employees for time spent on the business. This special magazine may also include information relating to payroll taxes owed to federal, state or local government agencies. Payroll information is recorded at various times during the accounting period; most companies log this information twice a month or whenever their employees get paid.
The sales journal records all goods or services sold to consumers or other businesses. This information is usually recorded in a special journal when transactions occur in normal business operations. The number of accounts used in the sales journal depends on how many products the company sells and how much detail they want to record. Offset postings are typically made between the sales journal and the cash receipts channel, which represents money owed to the company by customers.
The cash receipts journal represents all money currently owed to the company by customers. This amount may be reduced by any amount customers pre-pay when they initially shopped with the business. This special journal is very important to the company as it contains information about how much money the company has outstanding receivables.
The final special journal in a company’s accounting system is the cash disbursement journal. This special magazine contains all the information relating to the purchases of economic resources or business inputs made by the company. Financial transactions are recorded as they occur, whether paid for in cash or on behalf of the company.
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