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question pecial journals are designed to facilitate theprocess of journalizing and p 4292612

Question

pecial Journals are designed to facilitate theprocess of journalizing and posting transactions. They are used forthe most frequent transactions in a business. For example, inmerchandising businesses, companies acquire merchandise fromvendors, and then in turn sell the merchandise to individuals orother businesses. Sales and purchases are the most commontransactions for the merchandising businesses. A business such as aretail store will record the following transactions many times aday for sales on account and cash sales.

Description

Debit

Credit

Accounts Receivable

XXX

 

Sales

 

XXX

Sales Tax Payable

 

XXX

 

Description

Debit

Credit

Cash

XXX

 

Sales

 

XXX

Sales Tax Payable

 

XXX

Advantages:

In order to save time for journalizing the entries, and postingthe entries to the general ledgers and subledgers, Special Journalsare used instead. An accountant can be specialized in a type ofjournal entry and several accountants can work each on 1 or moredifferent types of journal entries only thereby using a betterdivision of labour.

In a more complex system, there are more repetitive transactionsaccording to type like sales, purchases, cash and others hence theneed to provide a separate special journal for each type. Entriesnot of a repetitive nature like corrections, adjusting entries andclosing entries are entered into the general journal.

Examples of Special Journals are sales journal, purchases journal,cash receipt journal and cash disbursement journals.

So what are the advantages of using the Special Journals?

They are as follows:

??Reduces detailed recording. Using the specialjournal concept, individual posting is eliminated. Only one postingfor the total amount is made to the appropriate ledger account atthe end of the accounting month. For example, if a company had 500purchases on account during the month, the purchases account wouldonly be debited one, not 500 times

??Permits better division of labor. Each specialjournal can be handled by a different person allowingspecialization and making the work more efficient.

??Permits better internal control. Allocation ofwork of special journal to individual person ensure that no oneperson has conflicting responsibilities like the receipt andrecording of cash which ensure better internal control.

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