Question

Why is it necessary to sub-divide the journal?

Answer 1

In large business firms, the journal is subdivided into Purchase, Sales, Purchase Return, Sales Return, Bills Receivable and Bills Payable books. This subdivision of the journal is necessary due to the following reasons:

1. When the number of transactions is quite large, one person may not be able to record all the transactions in time. Two or more persons can record transactions simultaneously only when the journal is subdivided.
2. If all the transactions are recorded in one journal, the journal may become too bulky a book and difficult to handle.
3. If all the transactions are recorded in one journal, it does not provide classified information such as monthly credit sales.
4. It is quite a time and labour-consuming process to record all transactions in one journal and then post each and every individual entry into the ledger.
5. When only one journal is maintained, chances of errors and frauds increase, and it becomes difficult to detect them.