Special journals are used to record specific business transactions such as payroll, sales, purchases, receipts, and disbursements. These journals are then recorded in the general ledger, and financial statements are created using ledger totals. Computerized accounting software is the modern representation of historical ledgers.
A special journal is part of a company’s general ledger that represents specific business transactions. Historical ledgers were made up of ledgers and columns. The general ledger included all of a company’s non-specialized transactions, along with the totals for each special ledger or journal. In today’s business environment, computerized accounting software is the modern representation of historical ledgers. Accounting software packages are based on the same accounting principles as using a general ledger and special or individual journals to report financial information.
Special accounting journals are commonly used to record a company’s payroll, sales, purchases, receipts and disbursements. Each special journal is made up of specific accounts used to record specific individual financial transactions. The total for each journal is usually recorded in the company’s general ledger at the end of the month. Financial statements are created using ledger totals.
Payroll journals include all information related to payments made to employees for time worked in the business. This special journal may also include information related to payroll taxes owed to federal, state, or local government agencies. Payroll information is recorded at various times throughout the accounting period; most companies record this information twice a month or whenever their employees are paid.
The sales journal records all goods or services sold to consumers or other businesses. This information is usually recorded in a special journal as transactions occur during normal business operations. The number of accounts used in the sales journal depends on the number of products sold by the company and the amount of detail they want to record. Typically, offsetting entries are made between the sales journal and the receipts pipeline, which represents money owed to the company by customers.
The cash receipts journal represents all cash currently owed to the company by customers. This amount may be reduced by any money paid in advance by customers when they initially made purchases from the company. This special journal is very important to the company as it contains information about how much money the company has in outstanding receivables.
The final special journal in a company’s accounting system is the cash disbursement journal. This special diary contains all the information related to the purchase of economic resources or commercial inputs made by the company. Financial transactions are recorded as they occur, regardless of whether they are paid in cash or on account by the company.
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