Accounting Best Practices, Fifth Edition

12–24. Use Standard Journal Entry Forms

The production of a typical set of financial statements requires the entry of a large number of journal entries. These must be made for a variety of reasons that even the best-run accounting department cannot avoid, such as cost allocations, accrued expenses for which a supplier invoice has not yet arrived, or the shifting of an expense to a different account than the one into which it was initially recorded. Recording each one of these entries can take a considerable amount of time, for a great deal of thought must go into which accounts are used, their account numbers, the amounts of money to be recorded in each account, and whether there will be a debit or credit entry. Consequently, the use of journal entries can take up a significant amount of the total time required to produce financial statements.

One way to reduce the time devoted to journal entries is to create a standard set of journal entry forms. These are used for the recording of standard journal entries where the amount of money to be recorded will vary, but the account numbers will stay the same most of the time. An example of such an entry is noted in Exhibit 12.5. This type of entry is a common one and probably applies to a majority of the journal entries every month. This type of journal entry standardization can be taken a step further by creating recurring journal entries, ...