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 a book of prime entry. This means that all business transactions are to be first recorded in the journal. However in a big business, recording of all the transactions in one journal will not only be inconvenient but also cause delay in collecting the information required. Also it will be very cumbersome. 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 term 'Special Journal' is used for 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 Receipts Journal records all the cash receipts while Cash Payments Journal records all the cash payments.
2) Goods Journal:- This journal is meant for recording all the transactions relating to goods. This journal may be further classified into following categories.
a) Purchase Journal:- This journal is meant for recording all the credit purchases of goods. As mentioned earlier that all the cash purchases are to be recorded in the 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 the credit sales of goods. Cash sales of the goods are recorded in the Cash Journal.
c) Purchase Returns Journal:- It is meant for recording all types of transactions related to returns of goods purchased on credit. It is also known as Return Outward Journal.
d) Sales Returns Journal:- This journal is meant for recording all types of transactions related to returns 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 classified into two categories.
a) Bills Receivable Journal:- This journal is meant for recording all bills of exchange or promissory notes received by the business from its debtors.
b) Bills Payable Journal:- This journal is meant for recording all bills of exchange or promissory notes issued by the business in favor of its creditors.
Journal is a book of prime entry. This means that all business transactions are to be first recorded in the journal. However in a big business, recording of all the transactions in one journal will not only be inconvenient but also cause delay in collecting the information required. Also it will be very cumbersome. 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 term 'Special Journal' is used for 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 Receipts Journal records all the cash receipts while Cash Payments Journal records all the cash payments.
2) Goods Journal:- This journal is meant for recording all the transactions relating to goods. This journal may be further classified into following categories.
a) Purchase Journal:- This journal is meant for recording all the credit purchases of goods. As mentioned earlier that all the cash purchases are to be recorded in the 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 the credit sales of goods. Cash sales of the goods are recorded in the Cash Journal.
c) Purchase Returns Journal:- It is meant for recording all types of transactions related to returns of goods purchased on credit. It is also known as Return Outward Journal.
d) Sales Returns Journal:- This journal is meant for recording all types of transactions related to returns 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 classified into two categories.
a) Bills Receivable Journal:- This journal is meant for recording all bills of exchange or promissory notes received by the business from its debtors.
b) Bills Payable Journal:- This journal is meant for recording all bills of exchange or promissory notes issued by the business in favor of its creditors.
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