Special-purpose Journals
Uses of Special-purpose Journals
The typical manual data processing system consists of several special-purpose journals, each of which is designed to record one kind of transaction. Recording only transactions of one kind in each journal reduces and simplifies the bookkeeper's task and allows for the division of labor. This division of labor is important is important for internal control purposes.
A special-purpose journal is constructed by devoting a column to a particular account ( for example, debits to Cash in the cash receipts journal and credits to Cash to Cash in the cash payments journal). Other columns in the journal depend on the kinds of transactions in which the company normally engages. Special-purpose journals also have columns for transaction dates and explanations or subsidiary account names, and reference columns.
Subsidiary ledgers contain individual accounts of a certain kind, such as customers' accounts (accounts receivable) or suppliers' accounts (accounts payable). The individual account records are kept separately in a subsidiary ledger to avoid making the general ledger too bulky. The total of the balance of the controlling account in the general ledger because the individual items are posted daily to the subsidiary accounts and the column totals are posted to the general ledger account monthly from the special-purpose journal.