1. Special Purpose Books or subsidiary books:- Sub-division of the Journal into various books recording transactions of similar nature are called subsidiary books.


2. Cash Book - Cash Book is a Special Purpose Subsidiary Book or Journal in which cash receipts and cash payments are recorded.


3. Kinds of Cash Book

I. Simple Cash Book : It is a cash book in which only cash transactions are recorded. It has only one column on each side of the cash book.

II. Double-column or Two-column Cash Book : It is a cash book which has two columns on each side to record cash receipts and payments besides cash discount allowed and received. The discount column on the debit side represents the discount allowed to the debtors while the discount column on the credit side represents the discount received from creditors.

III. Triple-column or Three-column Cash Book : It is a cash book which has three columns on each side, one column to record cash transactions, one for bank transactions and one for cash discount allowed and received.

IV. Petty Cash Book : It is a cash book in which payments of small amounts are recorded.


1.   Imprest System of Petty Cash: It is a system whereby an estimate of expenditure is made and the estimated amount is given to the Petty Cashier. Thereafter, he submits the statement of expenses at the end of the designated period, which is reimbursed to him to make the petty cash equal to the original petty cash amount.


2.   Cash Discount : Cash discount is the amount of discount received or allowed on cash payments and cash receipts respectively. Discount received is an income for the, business while discount allowed is an expense.


3.   Cheques in Hand : It means cheques that have been received but have not been deposited into bank.


4.   Contra Entry : It means a transaction involving both cash and bank. Such transactions though recorded in the cash book are not posted into the ledger. In the folio for ledger letter 'C' is written to indicate that it is a contra entry.


Business transactions are numerous and it becomes difficult to record all the transactions in one book of prime entry, i.e., Journal Book. For example, in a business, most of the transactions may relate to receipt and payment of cash, sale of goods and their purchase. It is convenient to maintain a separate book for each such class of transactions—one to record cash transactions, another to record purchase of goods and yet another to record sale of goods. Book of this type is called a book of original entry or prime entry. Journal entry is not passed for the transactions recorded in such books. They are posted to the ledger accounts. The system is called the Practical System of Accounting. These books of original or prime entry are also called a Special Journal or Subsidiary Books.


SUBSIDIARY BOOKS OR SUB-DIVISION OF JOURNAL:- We had discussed earlier that it is practically difficult to record all the transactions in only one book of prime entry. For convenience, the Journal is divided into a number of Subsidiary Books. These are

1. Cash Book: To record receipts and payments of cash, including receipts into and payments out of the bank.

2. Purchases Book: To record credit purchases of goods dealt in by the firm. All credit purchases of goods are recorded in this book.

3. Sales Book: To record the credit sales of goods dealt in by the firm.

4. Purchases Return Book: To record the return of goods previously purchased on credit

5. Sales Return Book: To record the return of credit sales made by customers.

6. Journal Proper: To record the transactions which cannot be recorded in any of the books mentioned above.


Advantages of Subsidiary Books:- The use of subsidiary books has the following advantages:


(i)Division of Work: Since in the place of one Journal, subsidiary books are also maintained, accounting work can be divided among a number of persons.

(ii) Specialisation and Efficiency: When the same work is handled by a particular person for a considerable time, he acquires expertise in it and becomes efficient in handling it. Thus, accounting is done more efficiently.

(iii) Saving of Time: Various accounting processes can be undertaken simultaneously because of the use of number of books. Thus, it leads to saving of time.

(iv) Availability of Information: Since a separate book is maintained for each class of transactions, information relating to each class is available at one place.

(v) Facility in Checking: In case, the Trial Balance does not agree, locating the error or errors is facilitated by the existence of separate books. Since the number of transactions is less in each subsidiary book as compared to only one Journal, it is easy to locate the errors.

(vi) Responsibility: Division of work results in assigning a particular job to a particular person. If an error is committed in recording, responsibility can be easily fixed.

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