General journal

From Wikipedia, the free encyclopedia

The general journal is where double entry bookkeeping entries are recorded by debitingone or more accounts and crediting another one or more accounts with the same total amount. The total amount debited and the total amount credited should always be equal, thereby ensuring the accounting equation is maintained.[1] Depending on the business's accounting information system, specialized journals may be used in conjunction with the general journal for record-keeping. In such case, use of the general journal may be limited to nonroutine and adjusting entries.

Special journals
From Wikipedia, the free encyclopedia

Accountancy

Key concepts

Accountant Accounting period Accrual Bookkeeping Cash and accrual basis Cash flow forecasting Chart of accounts Convergence Journal Special journals Constant item purchasing power accounting Cost of goods sold Credit terms Debits and credits Double-entry system Mark-to-market accounting FIFO and LIFO GAAP / IFRS General ledger Goodwill Historical cost Matching principle Revenue recognition Trial balance

Fields of accounting

Cost Financial Forensic Fund Management Tax (U.S.)

Financial statements

Balance Sheet Cash flow statement Income statement Statement of retained earnings Notes Management discussion and analysis XBRL

Auditing

Auditor's report Control self-assessment Financial audit GAAS / ISA Internal audit SarbanesOxley Act

Accounting qualifications

CIA CA CPA CCA CGA CMA CAT CIIA IIA CTP

Special Journals are designed to facilitate the process of journalizing and posting transactions. They are used for the most frequent transactions in a business. For example, in merchandising businesses, companies acquire merchandise from vendors, and then in turn sell the merchandise to individuals or other businesses. Sales and purchases are the most common transactions for the merchandising businesses. A business such as a retail store will record the following transactions many times a day for sales on account and cash sales.

Description

Debit Credit

Accounts Receivable XXX

Sales

XXX

Sales Tax Payable

XXX

Description

Debit Credit

Cash

XXX

Sales

XXX

Sales Tax Payable

XXX

In order to save time for journalizing the entries, and posting the entries to the general ledgers and subledgers, Special Journals are used instead. An accountant can be specialized in a type of journal entry and several accountants can work each on 1 or more different types of journal entries only thereby using a better division of labour.
Contents
[hide]

1 Types of Special Journals

1.1 Revenue journals

1.1.1 Sales journal 1.1.2 Cash receipts journal

1.2 Expense journals

1.2.1 Purchases Journal 1.2.2 Cash Payments Journal

2 Source documents 3 Format of Special Journals 4 References

[edit]Types

of Special Journals

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.

[edit]Revenue

journals

[edit]Sales journal
Sales journals record transactions that involve sales 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:

Debit debtors account with value of sales (increasing a current asset) Credit sales account with total amount (increasing income)

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 [edit]Cash receipts journal

sequential - #order

A cash receipts journal 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

[edit]Expense

journals

[edit]Purchases Journal
Purchases Journals record transactions that involve purchases 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 who you received payment from [edit]Cash Payments Journal

not sequential

Cash Payments Journals record transactions that involve expenditures paid with 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 who you was made paid

other types of people who are also expenses in purchases journal description

amount out of bank

[edit]Source

documents

When a transaction occur 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 a 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.

Receipt when a business receives money or cheques over the shop counter it will usually issue a receipt. A receipt is a document that acknowledges that money or cheques have been received.

Check book stub Invoice includes business name (sellers) and address, invoice number, ABN, buyer details, date, description of goods purchased, quantity, unit price, amount (per item x quantity), total price and GST. An

invoice is a document that records the details of a credit sale of inventory. The origin of the invoice is either delivered with the goods or sent separately to the customer. A number of copies are kept by the seller.

Delivery note is a document that sets out the type and quantity of the inventory delivered to the purchaser. When the inventory arrives at the premises of the purchaser, the delivery note is signed by the purchaser and is evidence that the goods ordered have been delivered. A copy is kept by the seller.

Purchase order Purchase requisition Credit note is a document issued by a seller that acknowledges that a customer is entitled to receive a reduction in the amount owing on goods purchased on credit.

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.

[edit]Format

of Special Journals

In 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.

$12,000

$1,200

July 2

1256

Furniture-X

$1,200

$1,200

General ledger
From Wikipedia, the free encyclopedia

Accountancy
Key concepts

Accountant Accounting period Accrual Bookkeeping Cash and accrual basis Cash flow forecasting Chart of accounts Convergence Journal Special journals Constant item

purchasing power accounting Cost of goods sold Credit terms Debits and credits Double-entry system Mark-to-market accounting FIFO and LIFO GAAP / IFRS General ledger Goodwill Historical cost Matching principle Revenue recognition Trial balance

Fields of accounting

Cost Financial Forensic Fund Management Tax (U.S.)

Financial statements

Balance Sheet Cash flow statement Income statement Statement of retained earnings Notes Management discussion and analysis XBRL

Auditing

Auditor's report Control self-assessment Financial audit GAAS / ISA Internal audit SarbanesOxley Act

Accounting qualifications

CIA CA CPA CCA CGA CMA CAT CIIA IIA CTP

The general ledger is the main accounting record of a business which uses double-entry bookkeeping. It will usually include accounts for such items as current assets, fixed assets, liabilities, revenue and expense items, gains and losses. Each General Ledger is divided into debits and credits sections. The left hand side lists debit transactions and the right hand side lists credit transactions. This gives a 'T' shape to each individual general ledger account. A "T" account showing debits on the left and credits on the right.

Debits Credits

The general ledger is a collection of the group of accounts that supports the value items shown in the major financial statements. It is built up by posting transactions recorded in the sales daybook, purchases daybook, cash book and general journals daybook. The general ledger can be supported by one or more subsidiary ledgers that provide details for accounts in the general ledger. For instance, an accounts receivable subsidiary ledger would contain a separate account for each credit customer, tracking that customer's balance separately. This subsidiary ledger would then be totalled and compared with itscontrolling account (in this case, Accounts Receivable) to ensure accuracy as part of the process of preparing a trial balance.[1]

Subsidiary Ledgers
A subsidiary ledger is a group of similar accounts whose combined balances equal the balance in a specific general ledger account. The general ledger account that summarizes a subsidiary ledger's account balances is called a control account ormaster account. For example, an accounts receivable subsidiary ledger (customers' subsidiary ledger) includes a separate account for each customer who makes credit purchases. The combined balance of every account in this subsidiary ledger equals the balance of accounts receivable in the general ledger. Posting a debit or credit to a subsidiary ledger account and also to a general ledger control account does not violate the rule that total debit and credit entries must balance because subsidiary ledger accounts are not part of the general ledger; they are supplemental accounts that provide the detail to support the balance in a control account.

Sales order
From Wikipedia, the free encyclopedia

The sales order, sometimes abbreviated as SO, is an order issued by a business to a customer. A sales order may be for products and/or services. Given the wide variety of businesses, this means that the orders can be

fulfilled in several ways. Broadly, the fulfillment modes, based on the relationship between the order receipt and production, are as follows:

Digital Copy - Where PRICES are digital and inventory is maintained with a single digital master. Copies are made on demand in real time and instantly delivered to customers.

Build to Stock - Where products are built and stocked in anticipation of demand. Most products for the consumer would fall into this category

Build to Order - Where products are built based on orders received. This is most prevalent for custom parts where the designs are known beforehand.

Configure to Order - Where products are configured or assembled to meet unique customer requirements e.g. Computers

Engineer to Order - Where some amount of product design work is done after receiving the order

A sales order is an internal document of the company, meaning it is generated by the company itself. A sales order should record the customer's originating purchase order which is an external document. Rather than using the customer's purchase order document, an internal sales order form allows the internal audit control of completeness to be monitored as a sequential sales order number can be used by the company for its sales order documents. The customer's PO is the originating document which triggers the creation of the sales order. A sales order, being an internal document, can therefore contain many customer purchase orders under it. In a manufacturing environment, a sales order can be converted into a work order to show that work is about to begin to manufacture, build or engineer the products the customer wants.

Invoice
From Wikipedia, the free encyclopedia

For the Japanese company, see Invoice (company). An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms. The buyer has a maximum amount of days to pay for these goods and is sometimes offered a discount if paid before the due date. In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so in addition to quantity, price and discount the invoicing amount is also based on duration. Generally speaking each line of a rental invoice will refer to the actual hours, days, weeks, months, etc. being billed.

From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the term invoice indicates money is owed or owing. In English, the context of the terminvoice is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money).

Accounts Receivable Aging is a report showing the accounts receivable (the amounts owed to the company by its customers), and also including the length of time the amounts have been outstanding. Typically, the aging report categorizes receivables as "current," "30 days," "60 days," "90 days," and "120 days and over." The purpose of this report is to show the business owner what receivables need to be dealt with more urgently because they have been overdue longer.

Aging of Accounts Payable Accounts payable are obligations due to trade suppliers who have provided inventory. They are the inverse of accounts receivable. A company's payables are a suppliers's account receivable. Like the company, suppliers are forced by the industry to offer terms. Since the supplier's competition offers payment terms, all suppliers will offer terms.