Difference Between General Journal And Special Journal

Organizations use different books to record different types of business transactions that occurred in the course of various business activities. These books are normally known as books of prime or original entry. 

A journal is the first book in which we record the transactions of a business. Each financial record in the journal is known as ENTRY. Journals are like diaries because in them, we record the day-to-day monetary dealings of a business in the order in which they happened.

There are two types of accounting journals: special journals and general journal.

Special Journals include sales journal or sales day book, sales return journal or sales return day book, purchases journal or purchases day book, purchases return journal or purchases return day book, etc. Also called day books, these journals are often used to record data on only one type of transaction.


General Journal is used to record transactions that are not repetitive. In this type of day book, a business records sales, purchases, sales returns, purchases returns in a single book. It includes the following:
  1. Date of transaction
  2. Account titles and numbers
  3. Amount to be debited and credited
  4. Brief description of the transaction

Definitions Of Terms Associated With Journals


Special Journals


This book of prime entry is used to review and record specific transactions like credit sales and credit purchases. The aim is to differentiate specific transactions from others in order to be managed well.

There are six types of special journal, which are:
  1. Sales journal
  2. Sales return journal
  3. Purchases journal
  4. Purchases return journal
  5. Cash receipts journal
  6. Cash payments or disbursements journal
They are explained below:

1. Sales journal is also known as sales day book and is used to record credit sales of a business. When accounting for credit sales, include the name of debtor, along with the transaction details, amount and its account number on the sales journal. The format is shown below:

Difference Between General Journal And Special Journal


2. Sales return journal is also known as sales return day book or return inwards is used to record credit sales returned from debtors as a result of damages on transit, wrong colour, etc. It has the same format as sales journal.

3. Purchases journal is also known as purchase day book and is used to record the credit purchases of an organization including creditor name, description, amount and its account number from which purchases were made. The format is shown below:

Difference Between General Journal And Special Journal


4. Purchases return journal which is also known as purchases return day book or return outwards is used to record credit purchases which were returned to suppliers. It has the same format as purchases journal.


5. The cash receipts journal is used to record all cash inflows of a business. Put differently, this type of special journal is used to account for all cash coming into the company. The format is shown below:

Difference Between General Journal And Special Journal


6. The cash payments journal also known as disbursements journal is a type of special journal that is used to manage all cash outflows of a business. In other words, it is used to record any transaction involving cash going out of the business. The format is shown below:

Difference Between General Journal And Special Journal


General Journal


This is also a book of prime entry that records all other transactions not included in the special journals and cash book. It commonly includes adjusted entries like accrual and prepayments, correction of errors, bad and doubtful debts, depreciation, sale and purchase of non-current assets. All the transactions are recorded by way of double entry. This means that there is debit and credit unlike the special journal with just amount of transaction since they are the same.

It looks like this:

Difference Between General Journal And Special Journal


What Are The Differences Between Special Journal And General Journal?


The main differences between general and special journals are:

1. Purpose Of Transactions Recorded


In special journal, all the recorded transactions are of similar nature. For example all the credit sales are recorded in special journal and all the credit purchases are recorded in purchases journal. General journal is used to record all other transactions which no special journals are kept. Such transactions may include adjustments for accrual and prepayments, bad debts, correction of errors, closing entries and sale and purchase of non-current assets.

2. Suitability And Use


General journal is right for small businesses where few transactions take place on daily basis. There is no need for small businesses to keep a special journal for different nature of transactions because only general journal is enough to serve as the book of prime entry. Special journals are kept by medium and large businesses where several similar transactions happen everyday and it becomes difficult for a single bookkeeper to record all those transaction in one journal.

3. Method Of Record-keeping


In general journals all the transactions are recorded in the form of two or more line entry (i.e. debit and credit) while in special journals all the transactions are recorded as single line entry with reference of debtors and creditors etc.

4. Posting To The Ledgers


All the transactions in general journals are posted in general ledger while in special journals all the transactions are posted in general and in personal ledgers.

5. Accumulation Of Transactions


In special journal, all the transactions are accumulated and the total is periodically posted to the ledgers while in general journals, the transactions are not accumulated and are posted individually to the ledgers.

6. Number Of Columns Opened


The primary format of a general journal is simple. It has columns for date, description, posting reference, a debit entry and credit entry column. A special journal, nevertheless, is more systematic and may include many columns depending on the information needs of the bookkeepers or accountant.

Conclusion


General and special journals are books of original entry which are used to record the financial transactions undertaken by a business. In special journal, we record all the transactions associated with credit sales, sales return or return inwards, credit purchases and purchases return or return outwards. 

In general journal all transactions such as adjustments to accounts like sale and purchase of non-current assets, accrual and prepayments, bad debts and correction of errors etc are recorded. In special journal, all the transactions are recorded individually while in general all transactions are recorded together, in form of two or more line entries.

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