What is A Special Journal?

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Complex accounting information systems are handled by large-scale merchandising companies that tackle thousands of transactions a day. The greater the number and the more complex transactions get. Therefore, perusing a general journal is cumbersome for accountants to pinpoint specific information because thousands of people can be related to these transactions every day. To add more stress, if a transaction affects any of the control accounts, the same records will be arduously repeated in the general ledger- firstly in the subsidiary and then in the control account.

This is where the need for a special journal is most highlighted. The special journal, which is also named ‘the specialised journal’, documents multiple lines separately and allows the accountant to transfer a single line of record to the general ledger. It reduces the tedious account recording tasks by helping the accountant overlook the unnecessary recording of separately posting repetitive transactions in a concise manner.
Special Journals and General Journal
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Types of Special Journals

Many companies have different types of special journals; like:

  • Bills Payable Journal
  • Bills Receivable Journal
  • Cash Payments or
  • Disbursements Journal
  • Cash Receipts Journal
  • Journal Proper or General Journal
  • Purchases Journal
  • Purchases Returns and Allowances Journal
  • Sales Journal
  • Sales Returns and Allowances Journal

Here are a few of the most used Special Journals explained below.

Sales Journal
This specialised journal is used to summatively record all credit sales of the company- when the client purchases something for credit. In other words, it does not keep records of any cash sales or sales returns. The Sales Journal typically has 5 columns, namely date, invoice number, client name, and credit sales price of the respective client. Each entry in this journal increases (debits) and simultaneously increases (credit) sales if the receivables account.
Sales Journal
Keeping the customer account balances current is crucial in record keeping; this is why every day when a credit sale takes place, the customer’s subsidiary ledger accounts are updated. At the end of the accounting period, the total of all credit sales is posted to accounts receivable and sales accounts in the general ledger.

The columnar styles of the sales journal differ based on the purposes of the company. Some companies use multi-columns sales journals for specific sales accounts and sales tax payable accounts.
Sales Journal
Purchase Journal
The journal that specialises in credit purchases of merchandise is the purchases journal. It has columns that mention the date, name, amount of credit purchase, and some companies even include the invoice date and credit terms. One of the main advantages of managing this special journal is that the company can keep track of the discount expiry dates and other offers. Each entry increases purchases (debits) and increases the accounts payable accounts (credits).
Every day the accountant updates the accounts payable accounts in the subsidiary ledger and keeps track of the daily creditor’s accounts respectively. The references in the purchases journal will indicate that the entries are posted daily. At the end of the accounting year, the total of the year’s credit amounts will be posted to the accounts payable and purchases accounts, and the account numbers will be shown in the parentheses as shown in the above figure. Some companies use the multi-column or columnar purchases journals to record the suppliers’ nature of offers and items. But either way, the subsidiary accounts will be updated as required.
Cash Receipts Journal

This special journal uses a multi-column frame to record the cash increments and discounts given to clients. It records:

  • Sales Discounts Offered to Customers: Debit Sales
  • Accounts Receivables: Debit Account Receivables and Credit Sales Account (Can use multiple columns to explain the nature of the transaction). These transactions are updated daily by the accountant in the subsidiary ledger and the journal hand in hand.
  • Other: Infrequent cash receipts like bank loans, interest revenue (can have multiple columns and capital investment).
  • Account: Records the credit entries that appear in the Other Account or Accounts Receivables Account.

At the end of the accounting year, all columns are posted in the general ledger as in single records- summarising the general ledger and avoiding it from being lengthy. Exceptionally, an ‘X’ is written under the Other column to mention that the total cannot be posted to the general account.

This special journal uses a multi-column frame to record the cash increments and discounts given to clients. It records:

  • Sales Discounts Offered to Customers: Debit Sales
  • Accounts Receivables: Debit Account Receivables and Credit Sales Account (Can use multiple columns to explain the nature of the transaction). These transactions are updated daily by the accountant in the subsidiary ledger and the journal hand in hand.
  • Other: Infrequent cash receipts like bank loans, interest revenue (can have multiple columns and capital investment).
  • Account: Records the credit entries that appear in the Other Account or Accounts Receivables Account.

At the end of the accounting year, all columns are posted in the general ledger as in single records- summarising the general ledger and avoiding it from being lengthy. Exceptionally, an ‘X’ is written under the Other column to mention that the total cannot be posted to the general account.

Cash Journal
Cash Disbursements Journal
This journal is used by large-scale merchandise companies to add a single record on the cash decrements in the general ledger. The Cash Disbursement Journal debits for account payables and other types of cash payments and credits for purchase discounts and cash. Every debited account payable or account in the Other column must be defined on every line. The accounts payable in the subsidiary ledger will also be frequently updated with their related indicators (reference number, invoice number or any index).

These company transactions will determine in which column they must be recorded, like depending on the type of transaction (salary expenses, commissions or other accounts that affect the Cash Disbursement Journal) will be recorded in the right column every time the transaction is made.

At the end of the accounting year. The total of the columns will be updated as single records in the General ledger except for the Other account. To indicate this, an ‘X’ is indicated in the parentheses of the journal.
General Journal
All information that cannot be recorded in the above journals is recorded in a special journal, namely the General Journal. The General Journal allows all the transactions that are not recorded previously to be adjusted and closed, like depreciation, accumulated depreciation and other expenses.

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Connect with Tigernix to learn why you should not miss out on our accounting integrations and how we can help your accounting and finance department streamline its operations every day. Your financial viability will never be suffering from human errors, daunting repetitive records or complex accounting methods anymore.

Special Journals of The Future

Special journals allow companies to reduce miscalculation, prevent fraudulent record-keeping and simplify the auditing operations of your company. It is well-classified, comprehensive and easy to read, and above all, it keeps your General Ledger less lengthy. The multiple financial functions recorded in these journals helps organisations to create value efficiently, accurately, probably and in real-time. However, traditional bookkeeping approaches still complicate recordkeeping, reconciliation, and cash flow forecasting.

Human-maintained financial accounts, books, journals and reports are now a thing of history. Many companies are using computerised systems to keep track of every transaction in their establishments automatically. These software suites will follow the same accounting principles using trained models to update transactions in their relevant general, special or individual journals for financial reporting requirements. The future of accounting will be fully computerised, where companies can find ways to concise the responsibilities of a team to a single person.
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