Subsidiary Book

Subsidiary Books (Special Journals)

Introduction

Subsidiary books, also known as special journals, are the books of original entry maintained to record specific types of transactions separately. In large business organizations, recording all transactions in a single journal becomes difficult and time-consuming. To overcome this problem, transactions are classified and recorded in different subsidiary books.

Meaning

A Subsidiary Book is a special book maintained to record similar types of business transactions before posting them to the ledger.

Need for Subsidiary Books

1. To divide work among accounting staff.

2. To save time and avoid confusion.

3. To record transactions systematically.

4. To reduce errors and improve efficiency.

5. To facilitate easy posting to ledger accounts.

Types of Subsidiary Books

1. Cash Book

Records all cash and bank transactions. It acts as both a journal and a ledger.

Single column cash book

Double column cash book

Three column cash book

2. Purchases Book

Records all credit purchases of goods.

3. Sales Book

Records all credit sales of goods.

4. Purchases Returns Book (Return Outward Book)

Records goods returned to suppliers.

5. Sales Returns Book (Return Inward Book)

Records goods returned by customers.

6. Bills Receivable Book

Records bills received from debtors.

7. Bills Payable Book

Records bills accepted in favour of creditors.

8. Journal Proper

Records transactions that cannot be recorded in any other subsidiary book (e.g., opening entries, rectification entries, adjustment entries).

Advantages of Subsidiary Books

1. Saves time and labour.

2. Makes accounting work systematic.

3. Helps in easy checking and verification.

4. Reduces chances of fraud.

5. Facilitates preparation of trial balance

Conclusion

Subsidiary books play a vital role in maintaining systematic and accurate accounting records. By classifying transactions into different books, businesses can handle large volumes of transactions efficiently and ensure proper control over financial activities.