Journals and ledgers are where business transactions are recorded in an accounting system. In essence, detail-level information for individual transactions is stored in one of several possible journals, while the information in the journals is then summarized and transferred (or posted) to a ledger.
The Book : Journals, Ledgers and Trial Balance
7.1 Special and General Journals
In special journals, 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 journal is maintained.
7.2 Subsidiary and General 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 or master account.
A general ledger account is an account or record used to sort, store and summarize a company's transactions. These accounts are arranged in the general ledger (and in the chart of accounts) with the balance sheet accounts appearing first followed by the income statement accounts.
7.3 Cash Book
A cash book is a financial journal that contains all cash receipts and disbursements, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger.
7.4 Petty Cash
A petty cash fund is a small amount of cash kept on hand to pay for minor expenses, such as office supplies or reimbursements. A petty cash fund will undergo periodic reconciliations, with transactions also recorded on the financial statements. There might be a petty cash fund, which can be a drawer or box, in each department for larger corporations.
7.5 Bank Reconciliation
A bank reconciliation is the process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement. The goal of this process is to ascertain the differences between the two, and to book changes to the accounting records as appropriate.
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Recommended text/reading:
- Sangster, A., & Wood, F. (2019). Business accounting volume 2 (14th ed.). Pearson.
- Sangster, A., & Wood, F. (2018). Business accounting volume 1 (14th ed.). Pearson.
- Weagant, J.J., Kimmel, P.D., & Keiso, D.E. (2018). Accounting principles (12th ed.). Wiley. (for this ebook you need to join this channel >> accounting <<
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