Question 26 of 45advanced🔍 AnalyzeLong Answer6 marks

Describe the advantages of sub-dividing the Journal.

Correct Answer

As a business expands and the volume of transactions becomes large, recording all entries in a single journal becomes cumbersome. To overcome this, the journal is sub-divided into special journals (also known as subsidiary books or daybooks) for recording transactions of a similar nature. The main advantages of this sub-division are:

  1. Division of Labour: Sub-dividing the journal makes division of labour possible in accounting work. Since different types of transactions are recorded in separate books, different accountants can work on them simultaneously.

  2. Efficiency and Accuracy: This system allows for quick, efficient and accurate recording of business transactions. It is specifically helpful because many business transactions are repetitive in nature, and recording them in dedicated books streamlines the process.

  3. Economical: The use of special journals proves to be economical for the business entity.

  4. Classification: It facilitates the organized recording of specific transactions, such as recording all cash transactions in one book or all credit sales in another, rather than journalising each transaction in one general book.

Exercise: Long Answers | Q: 5
For More Understanding

Explanation

The answer is derived entirely from the provided text segments, specifically the sections discussing the definition and purpose of special journals. The context highlights that while small businesses can use a single journal, expanding businesses find it cumbersome. The text explicitly lists 'economical', 'division of labour', and 'quick, efficient and accurate recording' as primary benefits, along with the handling of 'repetitive' transactions.

Solution Steps

  1. Identify the problem: Recording large volumes of transactions in a single journal is cumbersome.

  2. Identify the solution: Sub-division of the journal into special journals.

  3. List Advantage 1: It enables Division of Labour.

  4. List Advantage 2: It allows for Quick, Efficient, and Accurate recording.

  5. List Advantage 3: It is Economical.

  6. List Advantage 4: It handles Repetitive transactions effectively.

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