Why is journal sub-divided? Name the special journals generally maintained by the business and state the type of transactions entered in each of them.
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Journal :-
Journal is book of prime entry. This means that all the business transactions are to be first recorded in the journal. However, in a big business, recording of all transactions in one journal will not only be inconvenient but also cause delay in collecting information required. The journal is, therefore, sub-divided into many subsidiary books. This sub-division helps in division of labour, since different persons can write different journals. Maintaining of only one journal will make it very bulky and difficult to handle. So, sub-division will make its size less bulky and easy to maintain.
Special Journal :
The Special Journal is a journal which is meant for special purpose. The following are the various types of special journals generally maintained by the businesses and the types of transactions entered in each of them.
1) Cash Journal :
Cash Journal is meant for recording all the cash transactions of a business.It may be further classified into Cash Receipts Journal and Cash Payments Journal. Cash receipt journal records all cash receipts while cash payments journal records all cash payments.
2) Goods Journal :
This journal is meant for recording all transactions relating to goods. It may be further classified into following categories.
(a) Purchase Journal :- This journal is meant for recording all credit purchases of goods. Cash payments are to be recorded in cash journal. Moreover, only purchases of goods are to be recorded in this journal. The term 'goods means articles purchased for resale.
(b) Sales Journal :- This journal is meant for recording all credit sales of goods. Cash sales of the goods are to be recorded in cash journal.
(c) Purchase Return Journal :- It is meant for recording all types of transactions related to return of goods purchased on credit. It is also known as Return Outward Journal.
(d) Sales Return Journal :- This journal is meant for recording all types of transactions related to return of goods sold on credit. It is also known as Return Inward Journal.
(3) Bills Journal : This journal is meant for recording all bills of exchange or promissory notes received or issued by the business. It can be further classified into two categories.
(a) Bills Receivable Journal :- This is meant for recording all bills of exchange or promissory notes received by the business from its debtors.
(b) Bills Payable Journal :- This is meant for recording all bills of exchange or promissory notes issued by the business in favor of its creditors.
Journal is book of prime entry. This means that all the business transactions are to be first recorded in the journal. However, in a big business, recording of all transactions in one journal will not only be inconvenient but also cause delay in collecting information required. The journal is, therefore, sub-divided into many subsidiary books. This sub-division helps in division of labour, since different persons can write different journals. Maintaining of only one journal will make it very bulky and difficult to handle. So, sub-division will make its size less bulky and easy to maintain.
Special Journal :
The Special Journal is a journal which is meant for special purpose. The following are the various types of special journals generally maintained by the businesses and the types of transactions entered in each of them.
1) Cash Journal :
Cash Journal is meant for recording all the cash transactions of a business.It may be further classified into Cash Receipts Journal and Cash Payments Journal. Cash receipt journal records all cash receipts while cash payments journal records all cash payments.
2) Goods Journal :
This journal is meant for recording all transactions relating to goods. It may be further classified into following categories.
(a) Purchase Journal :- This journal is meant for recording all credit purchases of goods. Cash payments are to be recorded in cash journal. Moreover, only purchases of goods are to be recorded in this journal. The term 'goods means articles purchased for resale.
(b) Sales Journal :- This journal is meant for recording all credit sales of goods. Cash sales of the goods are to be recorded in cash journal.
(c) Purchase Return Journal :- It is meant for recording all types of transactions related to return of goods purchased on credit. It is also known as Return Outward Journal.
(d) Sales Return Journal :- This journal is meant for recording all types of transactions related to return of goods sold on credit. It is also known as Return Inward Journal.
(3) Bills Journal : This journal is meant for recording all bills of exchange or promissory notes received or issued by the business. It can be further classified into two categories.
(a) Bills Receivable Journal :- This is meant for recording all bills of exchange or promissory notes received by the business from its debtors.
(b) Bills Payable Journal :- This is meant for recording all bills of exchange or promissory notes issued by the business in favor of its creditors.
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