BASIC CONCEPT OF SUBSIDIARY BOOKS
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 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
(i) Special books- Followings are
the different types of special books (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. Bills receivable book
7. Bills payable book
(ii) Journal Proper- To record the transactions which cannot be recorded in
any of the books mentioned above. It is also called journal entry.
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