Need for Different Types of Journal Book in Accounting System

For convenient keeping of accounts maintaining more than one special journal according to nature of transactions instead of one journal is called classification of the journal.

Under double entry system transactions are primarily recorded in the journal and thereafter posted to the ledger.

In a small business, it is possible to record all the transactions in a general journal as the volume of transactions is limited in number.

But since the volume of transactions is very large in number in big business concern it is not possible for a single man to record all these transactions in one general journal and he faces a lot of problems in the completion of entries.

Read: 7 Different Types of Journal Book

Besides if all the transactions are recorded in a single book, the volume of the book becomes big in size and handling becomes inconvenient.

In this case, there remains the possibility of errors and omissions in the recording of transactions and creates the opportunity for forgery.

It is difficult to find out effects and information relating to the transaction if all the transactions are recorded in a single journal.

Recording of all transactions in one general journal is a time consuming, laborious and troublesome task.

That is why in modem times the use of many journals instead of one journal has been introduced in almost all business concerns especially the medium and large size business concerns.

The transactions of same nature are recorded in a special journal. These are termed as a daily journal, subsidiary journal or special journal.

Journal Book Subdivision is Required in Accounting

The following advantages are available if numerous transactions of the business are journalized in classified forms:

1. Time and labor saving: It becomes possible to record the transactions of special nature in different specific journals by different persons within a short time with minimum labor. It also becomes easier to post the transactions in the ledger from the journal.
2. Availability of necessary information: Since the transactions are recorded in different journals it becomes easier to find out the necessary information from them. For example -The quantity of cash receipt and payment, purchase, and sales on credit etc. can easily be sorted out from classified records in the journal.
3. Prevention of errors and forgery: Possibility of errors and forgery decreases to a great extent since the responsibility of recording subsidiary journal is vested on different employees.
4. The smaller size of the journal: Due to the classification of the subsidiary book every journal becomes smaller in size. As a result, these become handy.
5. Efficiency: Due to sub-division of the journal the honesty and efficiency of the employees related to the tasks of recording transactions increase.
6. Adjustment of subsidiary accounts with total control accounts: The total balance of every individual debit or credit accounts recorded in a subsidiary journal can be verified and adjusted with the balances of total debtors and creditors.

There is no hard and fast rule regarding the number of subsidiary journals where transactions of a business concern are recorded in classified forms.

These are fixed up according to the necessity of a business concern.