Subdivision Of journal

                      Subdivision Of journal

From the above discussion it is clear that for a ledger business concern, one journal is not  sufficient to record all business transactions and there should be  several journal and several clerks to record the transaction. But how many journal a business should have?

 We know that different types of transactions take place in a business concern. Some transactions take place repeatedly (hundreds to thousands times in a year ) and some transactions take place once or twice in a year. Obviously, it is not logical to provide a separate journal for transactions which rarely take place. 

For this purpose different groups of transactions are made and separate book is provided  for each group . Each group is consisted of similar types of transactions:

(1) Special Journal 

(2) General Journal

                       Special Journal

By special journal we mean, a journal in which transactions relating to a certain special groups are recorded. 

Special journal is again subdivided into eight groups:

(a) Purchases Books Or Purchase Journal:

Whenever  goods are purchase by a business on credit , these are recorded in these books.(cash is not involved). So this is a 'special journal' only and only for credit purchases. Other name of this book are Purchase Day Book, Bought Book, Bought journal, Inward Invoice Book.  

(b) Sales Book Or Sales Journal:

When ever goods are sold to the customers on credit (without receiving cash immediately ) , these are recorded in this book So this is a 'special journal' only and only for credit sales. Other name of this book are Sales Day Book,  Inward Invoice Book or   only Day Book.

(c) Purchases Returns Books:

The goods bought on credit if subsequently return by us to the suppliers for some solid reasons are recorded in this book. This book is also known as Return Outward Book.

(d) Sales Returns Books:

The goods Sold on credit if subsequently return by the customers  for some solid reasons are recorded in this book. This book is also known as Return Inward Book.

(e) Bill Receivable Books:

Sometimes debtors pay by means of accepting a bill of exchange instead of cash. All the bills (acceptance) received from the debtors are recorded in this book.

(f) Bill Payable Books:

Sometimes creditors are  paid  by means of accepting  bills drawn by them instead of cash. All the bills (acceptance)given to the creditors are recorded in this book.

(g) Cash Book Or Cash Journal:

All the transactions in which cash is involved, (whether the business has paid cash or receive cash ) are recorded in this book.

(h) Petty Cash Book:

Apart from cash book, for small or petty expenses, another book is maintained which is known as "Petty Cash Book" . The expenses such as, traveling , coolie, postage, etc. are recorded in this book It is a part of a cash book.

                      General Journal

The transactions which do not fall within the scope of above mentioned books, are recorded in this "Journal" . e.g. purchase of an asset on credit, depreciation on assets, expenses payable, bad debts etc. It is also known as Journal proper , Modern Journal or principle journal. Some authors call it only "Journal".

Note:

The main function of the above books is to supply necessary information to the ledger. All the transactions are posted in the ledger on the basis of information available from these books, So these books are called 'Subsidiary Books' of ledger.