Subsidiary books

Subsidiary books

What Are Subsidiary Books?

Subsidiary books are the subdivision of journal. The journal is sub-
divided in such a way that a separate book is used for each category of transactions which are similar in nature and are large in number. Subsidiary books are also called as special journals or day books.

Types Of Subsidiary Books:-

Following are the different types of  subsidiary books which are
generally opened by most companies:-
(1) Cash book
(2) Purchases book
(3) Sales book
(4) Purchase returns book
(5) Sales returns book
(6) Bills receivable book
(7) Bills payable book
(8) Journal proper

(1) Cash Book:-

Cash book is a book in which all the cash receipts and payments are recorded. Cash receipts are recorded on the debit side and cash payments are recorded on the credit side. There are four types of cash book:-
(i) Single column cash book:- Single column cash book has only one amount column on each side. All cash receipts are recorded on the debit side and all cash payments are recorded on credit side. So only cash receipts and cash payments are recorded in this book.
(ii) Double column cash book:- Double column cash book has two amount columns on each side i.e one for cash and other for discount. All cash receipts and cash discount allowed are recorded on the debit side and all cash payments and cash discount received are recorded on the credit side. So cash receipts and payments and discount received and allowed are recorded in this book.
(iii) Three column cash book:-Three column cash book has three amount columns on each side i.e one for cash, one for discount and one for bank. All cash receipts, cash discount allowed and bank deposits are recorded on the debit side and all cash payments, cash discount received and bank withdrawals are recorded on the credit side. So cash receipts and payments, discount allowed and received and bank deposits and withdrawals are recorded in this book.
(iv) Petty cash book:- Petty cash book is used to record only small petty cash expenses by the petty cashier. Petty cashier is the person who is authorized to make payments for petty cash expenses and to record them in petty cash book. In petty cash book, only cash receipts from the main cashier are recorded and not other receipts. Some of the examples of petty cash expenses are stationary expenses, conveyance expenses, office tea expenses, cartage, etc. So only cash receipts from main cashier and small payments of cash are recorded in this book.

(2) Purchases Book:-

Purchases book is used for recording the credit purchases of goods. Cash purchases are not recorded in this book. Purchase of any asset on cash or credit is also not recorded in this book. Purchases book is used only to record goods purchased on credit. The entries in purchase book are made on the basis of purchase invoices received from the suppliers.

(3) Sales Book:-

Sales book is used for recording the credit sales of goods. Cash sales are not recorded in this book. Sale of any asset on cash or credit is also not recorded in this book. Sales book is used only to record goods sold on credit. The entries in sales book are made on the basis of sales invoices issued to the customers.

(4) Purchase Returns Book:-

Purchase returns book is also called as return outwards book. It is used for recording the goods returned to the suppliers which were purchased on credit. Return of goods purchased on cash are not recorded in this book. Return of any asset purchased on cash or credit is also not recorded in this book. The entries in purchase returns book are usually made on the basis of debit notes issued to the suppliers or credit notes received from the suppliers.

(5) Sales Returns Book:-

Sales returns book is also called as return inwards book. It is used for recording the goods returned by the customers which were sold on credit. Return of goods sold on cash are not recorded in this book. Return of any asset sold on cash or credit is also not recorded in this book. The entries in sales returns book are usually made on the basis of credit notes issued to the customers or debit notes received from the customers.

(6) Bills Receivable Book:-

When the company sells goods on credit, the customer gives a guarantee to make payment in the future in the form of a bill. When the company receives such a bill, it is recorded in the bills receivable book as it will be the bill receivable for company and the company will receive payment in future against such bill.

(7) Bills Payable Book:-

When the company purchases goods on credit, it gives a guarantee to the supplier to make payment in future in the form of a bill. When the company issues such a bill, it is recorded in the bills payable book as it will be the bill payable for company and the company will make payment in future against such bill.

(8) Journal Proper:-

Journal proper is a book in which those transactions are recorded which cannot be recorded in any other subsidiary book. Following types of entries are usually recorded in journal proper:-
(i) Opening entries:- Opening entries are passed at the beginning of the financial year for bringing the balances of assets, liabilities and capital appearing in the balance sheet of previous year into the current financial year.
(ii) Closing entries:- Closing entries are passed at the end of the financial year for closing the nominal accounts by transferring them to the trading and profit and loss account.
(iii) Adjustment entries:- At the end of the financial year, adjustment entries are passed to bring unrecorded items such as closing stock, depreciation, outstanding and prepaid expenses, accrued income and income received in advance, bad debts, etc into the books of accounts.
(iv) Transfer entries:- Transfer entries are passed to transfer amount from one account to other account for e.g. transfer of net profit/net loss to the capital account or retained earnings account, transfer of drawings from drawings account to the capital account, etc.
(v) Rectifying entries:- Rectifying entries are passed to rectify the various errors committed while recording, posting, totaling, balancing, etc.
Some other types of entries which are recorded in journal proper are :-
– Credit purchases of assets
– Credit sales of assets
– Return of assets bought on credit
– Return of assets sold on credit
– Capital brought in kind by the proprietor
– Dishonor of bills receivable
– Cancellation of bills payable
– Withdrawal of goods by proprietor for personal use
– Goods distributed as free samples
– Goods lost by fire, theft, etc

 

 

10 thoughts on “Subsidiary books”

    1. Thanks for the new names for the traditional names of “Day books”. Eg Purchases, Sales and returns day book.

      These information are crucial to have hard copy, could you please make it printable.
      Cheers,

  1. Sir

    I am preparing for 12 th exam.. i saw a question as below

    Rectify the following erroros in the book of Mr pranaya

    1) sales return book was under cash 250
    2) cheque 1000 issued to Mr vikram was not recorded in cash book
    3) a purchase of 2000 from Mr gupta was entered in purchase return boo

    Pls help me . Is this to make susupense ac ?? Or reverse journal entries ???

    1. You can read the rectification of errors topic on this site carefully.I have explained everything in detail in that. If you still have any doubts then you can ask me.

  2. If purc hase transaction is done half cash and half credit ..should the full amount be recorded in purchase book and half in cash book or half in purchase book and half in cash book

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