A bookkeeping journal is a book of prime entry sometimes referred to as a book of original entry or day-book. The journals record transactions in chronological (date) order from original accounting source documents.
Sub-Divisions of the Bookkeeping Journal
The purpose of the bookkeeping journal is to avoid cluttering the general ledger with too much detail.
Journals allow the bookkeeping to be carried out by different staff with specialized accounting skills, saving time and money. In addition the separation of the bookkeeping allows for duties to be segregated and internal checks to be made reducing error and fraud.
In order to allow for similar transaction types to be grouped together and to ensure segregation of duties, the journal is usually sub-divided into the special journal and the general journal.
The special journal is usually sub-divided into a number of different journals depending on the requirements of the business. Each journal is used to make a chronological record of a specific type of transaction such as credit purchases or credit sales.
The examples below show sub-divisions of the special journal. The links provide further details on the use of each of the special journals listed.
- Purchases journal or purchases day book – Lists purchases on account with vendors and suppliers.
- Purchase returns journal or returns outwards day book – Lists returns of purchases on account to vendors and suppliers, and is sometimes referred to as the returns outwards journal.
- Sales journal or sales day book – Lists sales on account with customers.
- Sales returns journal or returns inwards day book – Lists returns of sales on account from customers, and is sometimes referred to as the returns inwards journal.
- Cash disbursement journal – Sometimes referred to as the cash payments journal, used to list the payment of cash by a business.
- Cash receipts journal – Lists the receipt of cash by a business.
Depending on the type of business, there might be additional special journals used such as for example, the payroll journal, bills receivable journal, or bills payable journal.
The use of this journal is more fully discussed in our General Journal in Accounting post.
The diagram below summarizes the sub-division of the journal into general and special journals.
Use of the Bookkeeping Journal
The bookkeeping journal simple lists transactions of a similar nature in date order. The entries in the journals are not part of the double entry bookkeeping posting.
For example, if a sales journal is used, the individual line entries in the journal are used to update the personal accounts of customers in the subsidiary sales ledger, and assuming the business uses control accounts, the period totals in the journal are used to update the ledger book using the double entry posting shown below.
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The posting of special journals to the ledger is more fully discussed in our special journals to general ledger entries tutorial.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.