Writing every single transaction into one General Journal — often the main journal of a business when nothing more specialized is used — becomes painfully slow once a business has hundreds of purchases and sales a month. The special journal system solves this by giving the four most common transaction types their own dedicated journal, each with pre-printed columns matching that transaction type exactly.
| Journal | Records |
|---|---|
| Purchases Journal | A special journal used to record all purchases on account |
| Sales Journal | Used to record sales on account |
| Cash Receipts Journal | Used to record all cash received |
| Cash Payments Journal | Used to record all payments |
| General Journal | Everything that does not fit the other four: adjusting entries, closing entries, correcting entries, and rare or unusual transactions |
From order to invoice: the purchasing paperwork trail
- A department fills out a Purchase Requisition — a form sent to the purchasing department requesting that goods or services be ordered.
- Purchasing prepares a Purchase Order — a form prepared by the buyer and sent to the seller, describing the items the buyer wants to purchase.
- When the goods arrive, the receiving department prepares a Receiving Report — a form that lists and describes all goods actually received.
- The supplier sends a purchase invoice billing for the goods.
- Before paying, the business performs the Matching Process — comparing the purchase order, the purchase invoice, and the receiving report to make sure the business ordered it, received it, and is being billed the agreed price for it.
As part of checking an invoice, a clerk verifies each line's Extension — the calculation of the quantity multiplied by the unit price. A line showing "50 units @ $12.00" should extend to exactly $600.00; a wrong extension is one of the most common invoice errors the matching process is designed to catch.
Billing customers
A Statement of Account is a form sent to customers that shows charges, amounts credited, and the balance of an account — essentially a monthly recap of everything that happened in a customer's subsidiary ledger account. A business with thousands of customers cannot prepare and mail every statement on the same day, so many use Cycle Billing — a method of spreading over the month the work of preparing and mailing statements to customers (for example, customers whose last name starts with A–F are billed in the first week, G–M in the second week, and so on).
When cash payments are made, many businesses use a Voucher Cheque — a two-part form consisting of a cheque with an attached statement describing the purpose of the payment — which doubles as both the payment itself and its own supporting documentation.