Subsidiary Books
Most of the big companies are recording the business transactions in one journal and the posting of the same to the concerned ledger accounts are very difficult tasks and which require more clerical labour also. For avoiding such kind of difficulties most of the business organizations are subdividing the journal in to subsidiary journals or subsidiary books. Subsidiary books are those books of original entry in which similar nature of transactions are recording in a chronological order.
Kinds of Subsidiary Books
There are different kinds of subsidiary books which includes purchase day book, Sales day book, purchase returns book, Sales returns book, Bills receivable books, Bills payable books, Cash book.
1. Purchase day book
purchase day book is used for recording credit purchase of goods only. This will not record any cash purchase or credit purchase of any assets. The term goods means all the commodities and services in which the company deals in day to day activities. The preparation of purchase day book involves the Date column, Particulars column, Invoice number column, Ledger folio column, inner amount column and Amount column.
2. Sales day book
Sales day book is mainly used for recording credit sales of goods and services in an organization. This will not record any cash sales or assets sales. The ruling for the preparation of this book is same as like Purchase day book. This involves the Date column, Particulars column, Invoice number column, Ledger folio column, inner amount column and Amount column.
3. Purchase returns book
This is maintained to record the transactions of goods returned to the supplier when purchase on credit. The ruling of the preparation of purchase return book or returns outward book involves Date, Particulars, Debit note number, Ledger folio and amount column.
4. Sales returns book
This book is used to record the goods returned by the customer the goods sold on credit. The ruling of the preparation of Sales return book or returns inward book involves Date, Particulars, credit note number, Ledger folio and amount column.
5. Bills receivable books
It is used to record the transactions when the bills received from the customer for credit sales. This provides a medium for posting bills receivable transaction. The preparation of this book involves Date when received, Drawer, Acceptor, Where payable, date of bill, term, due date ledger folio, Amount, remarks columns.
6. Bills payable books
This is used to record the acceptances given to the suppliers for credit purchase. The preparation of bills payable book involves Date of acceptance, giver, payee, Where payable, date of bill, term, due date, ledger folio, Amount, remarks columns.
7. Cash book
The cash book is used to record all the receipts and payments of cash. For the preparation of cash book there are different rules are available according to the nature of business. The different forms of cash book are as follows:-
a. Simple Cash book – This is the simple form of cash book.
b. Two column cash book – This type of cash book have two columns like cash column and discount column.
c. Three column cash book – This involves three columns such as Bank column, cash column and discount column.
d. Petty cash book - This is used to record petty expenses like postage, cartage, printing and stationery etc in the day to day business activities.