Subdivision of Journal:

Definition of Subdivision:
In a large business concern a journal is divided into parts so that several clerk could work at the same time. This is known as subdivision of journal.

Purpose of Subdivision:
In small concerns only one journal and one ledger may serve the purpose, because the number of transactions is very small. But in large business concerns the number of transactions are numerous, just one journal and one ledger will not do the job. That will cause much inconvenience i.e., if we have only one journal in a large scale business, it is not possible for one bookkeeper to record all the transactions in time. On the other hand, it will not be possible for more than one person to use the same journal simultaneously with the result that the accounting work will fall in arrear. There are some more factors which necessitate the use of more than one subsidiary book (journal):
1.

2.

3.

If all the transactions are recorded in one book (journal), the book will be very large, bulky, and difficult to handle. If one bookkeeper is asked to record all the transactions, the possibility of errors and mistakes will be great. It will also create opportunities for committing fraud. If all the transactions are recorded in one book, it will be difficult to trace out a particular transaction in future.

How Many Journals A Business Should Have?

We know that different types of transactions take place in a business concern. Some transactions take place repeatedly (hundreds to thousands times in a year) and some transactions take place once or twice in a year. Obviously, it is not logical to provide a separate journal for transactions which rarely take place. For this purpose different groups of transactions are made and a separate book is provided for each group. Each group is consisted of similar types of transactions. Journal is mainly divided into two:
1. 2.

Special journal General journal

Special Journal:

By special journal we mean, a journal in which transactions relating to a certain special group or recorded. Special journal is again subdivided into eight groups:
1. 2. 3. 4. 5. 6. 7. 8.

Purchases book or purchases journal Sales book or sales journal Purchases returns book or purchases returns journal Sales returns book or sales returns journal Bills receivable book Bills payable book Cash book or cash journal Petty cash book

General Journal:
The transactions which do not fall with in the scope of above mentioned books, are recorded in this journal e.g. purchase of an asset on credit, depreciation on assets, expenses payable, bad debts etc. It is also known as journal proper, Modern journal or principle journal. Some authors call it only "journal". The main function of the above books is to supply necessary information to the ledger. All the transactions are posted in the ledger on the basis of information available from these books, so these books are called subsidiary books

Advantages of Subdivision of Journal:

The following advantages are derived from division of journal:
1.

2.

3.

4.

Because of subdivision the books cannot be bulky and hence there will be no difficulty in handling them. Accounting work is divided amongst a large number of employees. So work is done nicely and promptly and no work is left in arrear. Each employee can be held responsible for mistakes committed by him. This serves as caution and care to the employees. The efficiency of the employees increases because of the division of labor.

5.

By keeping the book under the custody of different employees the chances of fraud and defalcation are minimized.

Advantages of Sub-division of Journal:

The main advantages of subdivision of journal (special journal) are as follows: Increases Efficiency: By the adoption of special journals, the work of recording business transactions can be entrusted to several persons, who will become more familiar with their work and their efficiency will be increased. Reduction of Bookkeeping: Each special journal is handled by a particular person, who will become more familiar with the work assigned to him. This may result in a reduction of book-keeping errors. Reduces Detailed Records: In special journals each transaction is recorded on a single line which is designed to provide all necessary information. For example, the purchase of merchandise is recorded on a single line, indicating a credit to the supplier's account and giving the supplier's name, the date, the amount and any other desired information. Reduces Detailed Posting: In special journals individual posting is eliminated. Only one posting for the total amount is made to the appropriate ledger account at the end of the months. For example, if a firm has 2,000 purchases on account during the month the purchases account will be debited once, not 2,000 times. Reduces Chances of Fraud: The chance of fraudulent alteration in an account is reduced because in special journals records of the transaction is kept in a chronological order and a particular person is responsible for it.

Better Internal Control: Better control is maintained because Special Journals allow the work to be divided in such a way that no employee has conflicting responsibilities. Saving of Time: Journalizing can be done by a number of employees simultaneously rather than one employee, thus the business transactions can be written up much more quickly. It results in saving of time. Saving in Bookkeeping Expenses: By the adaptation of special journals a large number of transactions of repetitive nature are recorded in one journal in one line. It saves bookkeeping expenses. Permits Future References: Transactions of similar nature are recorded in one journal. Future reference to any of them becomes easy.

The main reasons for subdividing the journal into many subsidiary books are as follows:

When there is a subdivision of journal in place of a single journal, the entire work can be divided among employees who can do the accounting work simultaneously. Proper division of work will lead to specialization which in turn, will lead to increase efficiency of the employees. Since a particular day book records only transaction of similar nature, any information in regard to those can be easily collected. Since the volume of transactions in a particular day book will be less as compared to single journal, the possibility of errors will be reduced. It will also be possible to locate errors easily. It is necessary to post the transactions from the day books to the ledger. Cash and credit transactions can be recorded in separate books. Journal is inadequate as the sole book of original entry, when the transactions are numerous. Therefore, subdivision of journal is must for big organizations. If all types of transactions are recorded in one journal, then the size of the journal will be very large and it will hamper the annual accounting work.