Definition: A special journal is any accounting journal in the general journal that is used to record and post transactions of similar types. In other words, it’s a place where similar transactions can be recorded and organized, so bookkeepers and accountants can keep track of different business activities.
What Does Special Journal Mean?
The most common special journals include the sales, cash receipts, purchases, and cash disbursements journals. All of these are used to record specific transactions and keep organized records outside of the general journal. In other words, this system is a way to categorize transactions into different types and groups.
Take the purchases journal for example. This special journal is used to record purchases made on credit with vendors. These purchases often include inventory purchases. Notice that only credit purchases are recorded here. Cash purchases are recorded in the cash disbursements journal. By only recording credit purchases in this journal, accountants and bookkeepers can use this as a record of all the credit purchases during a period.
When a credit purchase is made, the company debits the goods purchased account and credits the accounts payable account in the purchases journal. When the accounts payable balance is paid off, the cash payment is recorded in the cash disbursements journal—not the purchases journal.
Notice how these two different types of entries are recorded in different journals? This system helps keeps accurate and organized records of every type of transaction, so they can be reviewed later in the accounting period. If special journals weren’t used to organize transactions, everything would be recorded in the general journal and there would be no way to look at specific types of transaction.
Modern accounting systems do this type of categorization automatically. When a purchase is entered into the system, the correct journal is updated and can be accessible for review. Likewise, at the end of the accounting cycle, the journal transactions are posted to the individual ledger accounts to close the accounting period.