Ledgers and Special Journals
What are the advantages of the four different special journals? When would you use each type?
First of all, there are four different types of journals; sales journal, cash receipts journal, purchases journal, and cash payments journal. All of the following journals have their own special advantage. The advantage to the sales journal is that it is only a one line entry which leaves less room for error and saves time. When a credit sale is completed that is a good time to use the sales journal. The advantage to the cash receipts journal is that information about the cash balance is provided daily and weekly. When merchandise is sold for cash the cash receipts journal is used. The advantage to the purchases journal is that a single type transaction that frequently reoccurs is recorded. Any time a purchase is made the purchases journal is used. The advantage to the cash payments journal is that every time a payment is made from the company bank account it gets recorded, so every time a company makes a payment from their account the cash payments journal is used.
What is a subsidiary ledger and what purpose does it serve?
An addition to, and an expansion of, the general ledger is known as a subsidiary ledger. When a group of accounts have common characteristics it is known to be a subsidiary ledger. A subsidiary ledger serves the purpose of keeping the details of the individual balances off the general ledger.
What is a control account and what purpose does it serve?
A general ledger account that gives a brief summary of a subsidiary ledger's data is known as a control account. The purpose of this is to make sure the balance is correct for financial statements while at the same time make sure the general ledger does not have too much detail.
Which two general ledger accounts may act as control accounts for a subsidiary ledger?
The accounts receivable subsidiary ledger (collects transaction data of individual customers) and the accounts payable
First of all, there are four different types of journals; sales journal, cash receipts journal, purchases journal, and cash payments journal. All of the following journals have their own special advantage. The advantage to the sales journal is that it is only a one line entry which leaves less room for error and saves time. When a credit sale is completed that is a good time to use the sales journal. The advantage to the cash receipts journal is that information about the cash balance is provided daily and weekly. When merchandise is sold for cash the cash receipts journal is used. The advantage to the purchases journal is that a single type transaction that frequently reoccurs is recorded. Any time a purchase is made the purchases journal is used. The advantage to the cash payments journal is that every time a payment is made from the company bank account it gets recorded, so every time a company makes a payment from their account the cash payments journal is used.
What is a subsidiary ledger and what purpose does it serve?
An addition to, and an expansion of, the general ledger is known as a subsidiary ledger. When a group of accounts have common characteristics it is known to be a subsidiary ledger. A subsidiary ledger serves the purpose of keeping the details of the individual balances off the general ledger.
What is a control account and what purpose does it serve?
A general ledger account that gives a brief summary of a subsidiary ledger's data is known as a control account. The purpose of this is to make sure the balance is correct for financial statements while at the same time make sure the general ledger does not have too much detail.
Which two general ledger accounts may act as control accounts for a subsidiary ledger?
The accounts receivable subsidiary ledger (collects transaction data of individual customers) and the accounts payable