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Special journals (in the field of accounting) are specialized lists of financial transaction records which accountants call journal entries. In contrast to a general journal, each special journal records transactions of a specific type, such as sales or purchases. For example, when a company purchases merchandise from a vendor, and then in turn sells the merchandise to a customer, the purchase is recorded in one journal and the sale is recorded in another.
The types of Special Journals that a business uses are determined by the nature of the business. Special journals are designed as a simple way to record the most frequently occurring transactions. There are four types of Special Journals that are frequently used by merchandising businesses: Sales journals, Cash receipts journals, Purchases journals, and Cash payments journals.
Sales journals record transactions that involve sales purely on credit. [1] Source documents here would probably be invoices. Provides a chronological record of all credit sales made in the life of a business. Credit sales are transactions where the goods are sold and payment is received at a later date. The source documents for the Sales journal are copies of all invoices given to the debtors.
Double entry Accounting is achieved by:
Choose credit sales journal if this stock is then on-sold to customers who will pay later. The people/organizations here are known as debtors. Collectively, all these accounts that are to be paid to us by our customers are known as assets.
| date | details | folio # | invoice # | amount |
|---|---|---|---|---|
| date sale was made | who did you sell it to | sequential - #order |
A cash receipts journal (CRJ) records transactions that involve payments received with cash. [1] Source documents would probably be receipts and cheque butts. The CRJ records the cash inflow of a business. Discount allowed is an expense as the discount allowed is the cost to the seller of obtaining an inflow of cash from a debtor weeks earlier than would be the case.
| date | details | receipt # | discount allowed | sales | debtors | Other | BANK |
|---|---|---|---|---|---|---|---|
| date sale was made | who you received payment from | people who are also in sales journal | other types of income description | amount into bank |
Purchases Journals record transactions that involve purchases purely on credit. [2] Source documents are invoices. For instance, the purchase of inventory on credit is recorded in the purchases journal.
| date | details | folio #33 | invoice # | amount |
|---|---|---|---|---|
| date sale was made | name of supplier | not sequential |
Cash Payments Journals record transactions that involve expenditures paid with cash and involves the cash [3] Source documents are likely receipts and cheque butts. The CPJ records the cash outflow of a business. If the owner of a business withdraws cash from the business an entry is made in the CPJ. Discount received is the cash discount received by a purchaser, it is an income item for the purchaser.
| date | details | cheque # | discount received | purchases | creditors | Other | BANK |
|---|---|---|---|---|---|---|---|
| date payment was made | who you paid | people who are also in purchases journal | other types of expenses description | amount out of bank |
When a transaction occurs between a business and an external party, a source document will usually be created. [4] Source documents are business forms that provide evidence of each transaction and give the details that are entered later into one of the journals in a computer accounting system. Some computer systems, such as payroll systems, also generate transactions that are recorded in one or more journals, but without paper source documents.
Folio Number: Every page of a journal is numbered. This number is known as a folio number. [5] The folio number is used as a cross reference between the journal and the ledger accounts. The use of folio numbers makes it easy to refer back from the ledger account to the journal entry or forward from the journal entry to the ledger account. In addition, folio numbers are a check that all journal entries have been recorded in the ledger system.
Each ledger account has a folio number column. The name and page of the journal from which the ledger entry came is recorded in the folio number column.
Each journal has a folio number column. The number of the ledger account to which the journal entry was posted is recorded in the folio number column of the journal.
Cash money, EFTPOS, cheques, credit cards. Receipts and payments.
Credit sale of inventory on credit Purchases.
Cash Journals record items sold or purchased with cash and they also record income received (debtor payment, interest) and daily expenses. If the transaction is of a cash nature, you must be convinced that money/cheque/credit card was also exchanged at the time that the good or service was exchanged.
Credit Journals record purchases or sales on credit. If the transaction is of a credit nature, you will assume that the cash will be exchanged after the exchange of the good or service. At this stage, these will only be concerned with your firm acquiring stock and the selling of that stock to customers who will pay later.
In the general journal, transactions are recorded in several lines (see Figure 1), and each transaction is posted to the general ledger separately. For example, if fifty sales on account were made during one day, fifty ledger postings would have to be made to three general ledger accounts: Accounts Receivable, Sales, and Sale Tax Payable. In special journal, transactions are recorded in a single line, and the format of the journal made it possible to post only the total amount for each account to the general ledger. For example, if fifty sales on account were made during one day, only the total amount for Accounts Receivable, Sales, and Sales Tax Payable were posted to the general ledger. Thus the posting process is more efficient. Figure 2 shows the example formats of the Special Journals.
SALES JOURNAL
| Date | Sale No. | To Whom Sold | Post. Ref. | Accounts Receivable Debit | Sales Credit | Sales Tax Payable Credit |
|---|---|---|---|---|---|---|
| April 1 | 900 | A. Smith | $1,000.00 | $940.00 | $60.00 | |
| April 1 | 901 | B. Johnson | $2,000.00 | $1,880.00 | $120.00 | |
| April 1 | 902 | C. Chang | $1,000.00 | $940.00 | $60.00 | |
| April 4 | 904 | D. Garcia | $1,000.00 | $940.00 | $60.00 |
CASH RECEIPT JOURNAL
| Date | Account Credited | Post Ref. | General Credit | Accounts Receivable Credit | Sales Credit | Sales Tax Payable Credit | Cash Debit |
|---|---|---|---|---|---|---|---|
| May 1 | B. Johnson | $1,000 | $1,000 | ||||
| May 3 | C. Chang | $1,000 | $1,000 | ||||
| May 5 | A. Smith | $1,000 | $1,000 | ||||
| May 8 | Interest Receivable | $400 | $400 |
PURCHASES JOURNAL
| Date | Invoice No. | From Whom Purchased | Post Ref. | Purchased Debit / Accounts Payable Credit |
|---|---|---|---|---|
| June 2 | 6321 | BCD Corp. | $12,000 | |
| June 5 | 12D | Telecom8 Inc | $800 | |
| June 21 | 412 | Furniture-X | $2,000 |
CASH PAYMENTS JOURNAL
| Date | Check No. | Account Debited | Post Ref. | General Debit | Accounts Payable Debit | Purchases Credit | Cash Credit |
|---|---|---|---|---|---|---|---|
| July 1 | 1254 | Rent Expense | $1,200 | $1,200 | |||
| July 2 | 1255 | BCD Corp. | $1,200 | $1,200 | |||
| July 2 | 1256 | Furniture-X | $1,200 | $1,200 |
Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organizations. It involves preparing source documents for all transactions, operations, and other events of a business. Transactions include purchases, sales, receipts and payments by an individual person or an organization/corporation. There are several standard methods of bookkeeping, including the single-entry and double-entry bookkeeping systems. While these may be viewed as "real" bookkeeping, any process for recording financial transactions is a bookkeeping process.
A cash register, sometimes called a till,cashbucker, or automated money handling system, is a mechanical or electronic device for registering and calculating transactions at a point of sale. It is usually attached to a drawer for storing cash and other valuables. A modern cash register is usually attached to a printer that can print out receipts for record-keeping purposes.
Trade credit is the loan extended by one trader to another when the goods and services are bought on credit. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organizations as a source of short-term financing. It is granted to those customers who have a reasonable amount of financial standing and goodwill.
Discounts and allowances are reductions to a basic price of goods or services.
Debits and credits in double-entry bookkeeping are entries made in account ledgers to record changes in value resulting from business transactions. A debit entry in an account represents a transfer of value to that account, and a credit entry represents a transfer from the account. Each transaction transfers value from credited accounts to debited accounts. For example, a tenant who writes a rent cheque to a landlord would enter a credit for the bank account on which the cheque is drawn, and a debit in a rent expense account. Similarly, the landlord would enter a credit in the rent income account associated with the tenant and a debit for the bank account where the cheque is deposited.
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable to a third party at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs. Forfaiting is a factoring arrangement used in international trade finance by exporters who wish to sell their receivables to a forfaiter. Factoring is commonly referred to as accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing. Accounts receivable financing is a term more accurately used to describe a form of asset based lending against accounts receivable. The Commercial Finance Association is the leading trade association of the asset-based lending and factoring industries.
Accounts payable (AP) is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents. An accounts payable department's main responsibility is to process and review transactions between the company and its suppliers and to make sure that all outstanding invoices from their suppliers are approved, processed, and paid. The accounts payable process starts with collecting supply requirements from within the organization and seeking quotes from vendors for the items required. Once the deal is negotiated, purchase orders are prepared and sent. The goods delivered are inspected upon arrival and the invoice received is routed for approvals. Processing an invoice includes recording important data from the invoice and inputting it into the company's financial, or bookkeeping, system. After this is accomplished, the invoices must go through the company's respective business process in order to be paid.
Accounts receivable, abbreviated as AR or A/R, are legally enforceable claims for payment held by a business for goods supplied or services rendered that customers have ordered but not paid for. The accounts receivable process involves customer onboarding, invoicing, collections, deductions, exception management, and finally, cash posting after the payment is collected. These are generally in the form of invoices raised by a business and delivered to the customer for payment within an agreed time frame. Accounts receivable is shown in a balance sheet as an asset. It is one of a series of accounting transactions dealing with the billing of a customer for goods and services that the customer has ordered. These may be distinguished from notes receivable, which are debts created through formal legal instruments called promissory notes.
An invoice, bill or tab is a commercial document issued by a seller to a buyer relating to a sale transaction and indicating the products, quantities, and agreed-upon prices for products or services the seller had provided the buyer.
A traveller's cheque is a medium of exchange that can be used in place of hard currency. They can be denominated in one of a number of major world currencies and are preprinted, fixed-amount cheques designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.
A receipt is a document acknowledging that a person has received money or property in payment following a sale or other transfer of goods or provision of a service. All receipts must have the date of purchase on them. If the recipient of the payment is legally required to collect sales tax or VAT from the customer, the amount would be added to the receipt, and the collection would be deemed to have been on behalf of the relevant tax authority. In many countries, a retailer is required to include the sales tax or VAT in the displayed price of goods sold, from which the tax amount would be calculated at the point of sale and remitted to the tax authorities in due course. Similarly, amounts may be deducted from amounts payable, as in the case of taxes withheld from wages. On the other hand, tips or other gratuities that are given by a customer, for example in a restaurant, would not form part of the payment amount or appear on the receipt.
In business practice, cash account refers to a business-to-business or business-to-consumer account which is conducted on an immediate payment basis i.e. no credit is offered. It may also refer to an account held with a brokerage firm, in which a client deposits cash to buy stocks, bonds and other securities.
Business-to-business is a situation where one business makes a commercial transaction with another. This typically occurs when:
A general journal is a daybook or subsidiary journal in which transactions relating to adjustment entries, opening stock, depreciation, accounting errors etc. are recorded. The source documents for general journal entries may be journal vouchers, copies of management reports and invoices. Journals are prime entry books, and may also be referred to as books of original entry, from when transactions were written in a journal before they were manually posted to accounts in the general ledger or a subsidiary ledger.
A voucher is a bond of the redeemable transaction type which is worth a certain monetary value and which may be spent only for specific reasons or on specific goods. Examples include housing, travel, and food vouchers. The term voucher is also a synonym for receipt and is often used to refer to receipts used as evidence of, for example, the declaration that a service has been performed or that an expenditure has been made. Voucher is a tourist guide for using services with a guarantee of payment by the agency.
Debtor finance is a process to fund a business using its accounts receivable ledger as collateral. Generally, companies that have low working capital reserves can get into cash flow problems because invoices are paid on net 30 terms. Debtor finance solutions fund slow-paying invoices, which improves the cash flow of the company and puts it in a better position to pay operating expenses.
A payment is the tender of something of value, such as money or its equivalent, by one party to another in exchange for goods or services provided by them, or to fulfill a legal obligation or philanthropy desire. The party making the payment is commonly called the payer, while the payee is the party receiving the payment. Whilst payments are often made voluntarily, some payments are compulsory, such as payment of a fine.
Trade finance is a phrase used to describe different strategies that are employed to make international trade easier. It signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer. Various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade. Trade finance manifest itself in the form of letters of credit (LOC), guarantees or insurance and is usually provided by intermediaries.
WorkingPoint is a web-based application providing a suite of small business management tools. It is designed to offer a single point-of-access for all business management needs while offering a user-friendly interface. WorkingPoint’s functionalities include double-entry bookkeeping, contact management, inventory management, invoicing and bill & expense management.
Fiscalization is a system designed to avoid retailer fraud in the retail sector. It involves using special cash registers or software to accurately report sales, helping prevent tax evasion. Fiscalization laws about cash registers have been introduced in various countries to control the grey economy by ensuring that all retail transactions are properly recorded and taxed, thereby reducing the possibility of fraud.
Heintz, James A. and Parry, Robert W. Jr. (2008). College Accounting (19th Edition) P440-459. Thomson South-Western. ISBN 978-0-324-37616-6