What Are The Advantages Of Using Special Journals

In a more complex system, there are more repetitive transactions according to type like sales, purchases, cash and others hence the need to provide a separate special journal for each type. Entries not of a repetitive nature like corrections, adjusting entries and closing entries are entered into the general journal.

Examples of Special Journals are sales journal, purchases journal, cash receipt journal and cash disbursement journals.

So what are the advantages of using the Special Journals?

They are as follows:

• Reduces detailed recording. Using the special journal concept, individual posting is eliminated. Only one posting for the total amount is made to the appropriate ledger account at the end of the accounting month. For example, if a company had 500 purchases on account during the month, the purchases account would only be debited one, not 500 times

• Permits better division of labor. Each special journal can be handled by a different person allowing specialization and making the work more efficient.

• Permits better internal control. Allocation of work of special journal to individual person ensure that no one person has conflicting responsibilities like the receipt and recording of cash which ensure better internal control.
  

Answer To Question On Simple Extended Trial Balance

[Click the image for larger picture]

This is the answer to the question on a simple worked example of how to prepare Trading,Profit & Loss Account and Balance Sheet from using an EXTENDED Trial Balance Worksheet.

Worked Example on the preparation of a Simple Extended Trial Balance

[Click the image for bigger picture]





This worked example reflects the preparation of the Trading,Profit & loss account and Balance Sheet from the Trial balance using the EXTENDED worksheet (re:Extended Trial Balance method)

Click here to see ANSWER to this question on Extended Trial Balance

Worked Example No.2 On Accounting Equation

Refresh your understanding on Debit And Credit Rules/Double Entry/Accounting Equation &
The Accounting Equation in relationship to the Balance Sheet

Worked Examples on Accounting Equation:

Question No 1: Fill In The Blank for the following:

1.0	Assets	Liabilties	Capital
a	40,000	10,000	?
b	15,000	?	11,000
c	?	5,000	10,000
d	11,000	8,000

Answer:

1a $30,000 ($40,000-$10,000)

1b $4,000 ($15,000-$11,000)

1c $15,000 ($5,000+$10,000)

1d $3,000 ($11,000-$8,000)

Question No. 2

The following is the summary data of ABC Ltd for August presented in equation form. Describe each of the transactions that occurred during August.

2.0	ASSET Cash	ASSETS Supplies	ASSETS Equipment	= LIABILITIES	+
a	+$10,000				+$10,000	Capital
b	-$2,000		+$2,000
c	-$200	+$200
d			+$700	$700
e	+$1,000				+$1,000	Income
f	-$600				-$600	Salaries
g	-$300			-$300
h	-$100				-$100	Drawing
	$7,800	$200	$2,700	= $400 +	$10,300

Answer:

2a The owner made an investment by injecting cash as capital

2b Equipment was bought and paid for

2c Supplies were bought and paid for

2d Additional equipment was bought on account creating a liability

2e The company recorded an income for work done for customers

2f The company paid salaries to the workers

2g Cash was paid to reduce amount owing to Accounts Payable(Liability)

2h Owner withdrew cash for her personal use.