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A special journal is a part of a company’s accounting ledger that represents specific business transactions. Historical accounting ledgers were made up of paper books and column paper. The general ledger included all the non-specialized transactions of a company, along with totals from each individual ledger or special journal. In today’s business environment, computerized accounting software is the modern representation of the historical accounting ledgers. Accounting software packages are based on the same accounting principles of using a general ledger and special or individual journals for reporting financial information.
Special accounting journals are commonly used to record a company’s payroll, sales, purchases, cash receipts and cash disbursements. Each special journal is made up of specific accounts that are used to record specific, individual financial transactions. The total for each journal is usually recorded in the company’s general accounting ledger at the end of the month. Financial statements are then created using the totals from the general ledger.
Payroll journals include all information relating to the payments made to employees for time worked in the business. This special journal may also include information relating to the 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 get 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 the 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 wish to record. Offsetting entries are usually made between the sales journal and the cash receipts channel, which represents the money owed to the company by customers.
The cash receipts journal represent all money currently owed the company by customers. This amount may be reduced by any money paid upfront by customers when they initially made purchases at the business. This special journal is very important to the company since it contains information regarding how much money the company has in outstanding receivables.
The final special journal in a company’s accounting system is the cash disbursements journal. This special journal contains all information relating to the purchases of economic resources or business inputs made by the company. Financial transactions are recorded as they occur, regardless of whether they are paid for by cash or on account by the company.