Chapter 5 Subsidiary Books
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Project on BK & Accountancy
Subsidiary books, also known as special journals or day
books, are detailed accounting records used to organize and record specific
types of financial transactions. These books complement the general ledger by
categorizing and summarizing transactions before they are posted to the ledger.
Using subsidiary books enhances efficiency and accuracy in bookkeeping,
particularly for businesses with a high volume of repetitive transactions.
Here are
the primary types of subsidiary books used in accountancy:
1. Purchases Book:
• Purpose:
Records all credit purchases of goods intended for resale.
• Content:
Includes details like date, supplier's name, invoice number, and amount.
2. Sales Book:
• Purpose:
Records all credit sales of goods.
• Content:
Lists the date of sale, customer's name, invoice number, and sales amount.
3. Purchases Returns Book (Return Outwards
Book):
• Purpose:
Records all returns of goods previously purchased on credit.
• Content:
Includes the date of return, supplier’s name, debit note number, and amount.
4. Sales
Returns Book (Return Inwards Book):
• Purpose:
Records all returns of goods previously sold on credit.
• Content:
Contains the date of return, customer's name, credit note number, and amount.
5. Cash Book:
• Purpose:
Records all cash transactions, including receipts and payments.
• Types:
Single column (cash only), double column (cash and bank), and triple column
(cash, bank, and discounts).
6. Bills Receivable Book:
• Purpose:
Records promissory notes and bills of exchange received by the business.
• Content:
Includes the date of receipt, drawer’s name, acceptor’s name, due date, and
amount.
7. Bills Payable Book:
• Purpose:
Records promissory notes and bills of exchange issued by the business.
• Content:
Contains the date of issue, payee’s name, due date, and amount.
8. Journal Proper (General Journal):
• Purpose:
Records transactions that do not fit into the other subsidiary books, such as
opening entries, closing entries, adjustments, and corrections.
• Content:
Includes the date, particulars of the transaction, ledger folio, and amounts.
Benefits
of Using Subsidiary Books:
• Efficiency:
Streamlines the recording process by dividing it into specialized categories.
• Accuracy:
Reduces the risk of errors by segregating different types of transactions.
• Detail:
Provides detailed records that can help in tracking and managing specific
aspects of business transactions.
• Audit
Trail: Facilitates easier auditing and tracking of financial activities.
Posting
to General Ledger:
After recording transactions in the subsidiary books, the totals or individual entries are periodically posted to the appropriate accounts in the general ledger. This practice ensures that the general ledger remains updated with summarized information from the detailed records maintained in the subsidiary books.