For your business’s bookkeeping, you use a general journal to chronically record all of your business transactions as they happen and keep track of your company’s financial data. But many business owners also use specialized journals alongside their general journal to separate, record, and post their most frequent transactions efficiently.
Do you use specialized journals? If so, you know that they vary depending on the types of expenses recorded in them. Using them makes it easier and quicker to find certain transactions or post them than it would be using the general journal. If you don’t use specialized journals, understanding how they can remove a lot of the stress from your bookkeeping and simplify measures when you need to develop financial information can make them a good choice to use going forward.
The Different Types of Specialized Journals
The most common types of specialized journals are revenue and expense journals.
- Revenue journals commonly include sales journals and cash receipts journals
- Expense journals commonly include purchases journals and cash payments journals
These four specialty journals represent the most commonly used accounting transactions.
The Sales Journal
Sales journals are a type of revenue journal which deals with credited sales. The sales journal lists all credit sales made by the business in chronological order. The source for this information is invoices. This journal features double-entry accounting, balancing debits (a debtor’s account), and credits (sale account). The debtor’s account deals with increasing current assets, while the sales account deals with increasing income.
The Cash Receipts Journal
A cash receipts journal deals with cash payments, the sources of which would be from receipts and check stubs. This journal monitors the cash received by a business, crediting sales and debiting cash. This can keep the general journal from becoming too cluttered with information.
The Purchases Journal
A purchase journal is a type of expense journal which details all credited purchases from invoices. If your business makes a lot of purchases, separating them out from the general journal keeps it from becoming overwhelmed.
The Cash Payments Journal
Also known as a cash disbursements journal, the cash payments journal deals with cash payments as entered from receipts and check stubs. This journal also monitors cash expensed or withdrawn by a business, with the exception being payroll.
Other Special Journals
While the four most common journals are listed above, some businesses also separate out additional specialized journals such as:
- Payroll journals that record salaries and wages
- Sales return & allowances journals that record returned sales and sales allowances
- Purchase returns & allowances journals that record purchase returns and purchased allowances
Whichever specialized journals are used, the process and end result are the same: a source document is created when transactions occur that details the transaction. It also acts as a paper trail for both accounting and potential auditing purposes. Depending on the category, a journal’s document may include:
- A receipt section, which shows when cash or checks were received
- An invoice, detailing the name and address of the business, date of service, type of goods purchased, and cost
- Purchase orders, deposit slips, or canceled checks
Entering all of this information into the journals not only organizes all of your company’s financial information, but you can relax knowing that your financial picture is accurate.
Bookkeeping Software and Specialized Journals
On the other hand, while the integrity of your financial transactions and ease of access are valuable, it might seem that specialized bookkeeping is a lot of manual work. If keeping four or even more specialized journals seems overwhelming, the good news is that bookkeeping software has made it easy to handle. You can log both specialty and general journal entries online at the same time, separating them out with a click of a dropdown box.
However, although software can make journal entries faster and easier, working on your books can take you away from working on your business. Fortunately, many small business owners have found that outsourcing their bookkeeping gives them the best of both worlds: they get the help they need so they have the time to grow their business.