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Subsidiary Books
- M.Remitha,
MBA M.Phil
Meaning of subsidiary books
Subsidiary books are sub-divisions of
journal in each of which transactions of
similar nature are recorded. These are the
books of prime entry. Instead of recording in
one journal, the transactions are recorded
in a number of prescribed books.
Types of subsidiary books
Advantages of subsidiary books
(i) Proper and systematic record of business transactions
(ii) Convenient posting
(iii) Division of work
(iv) Efficiency
(v) Helpful in decision making
(vi) Prevents errors and frauds
(vii) Availability of requisite information at a glance
(viii) Detailed information available
(ix) Saving in time
(x) Labour of posting is reduced
Format for Purchases book
Illustration 1
In the books of Shanthi Furniture Mart Purchases book /
Purchases journal
Illustration 2
Purchases returns book
After purchases of goods, the business unit may find
that some of the goods are not upto the satisfactory level
because of the following reasons:
(a)Goods may be defective.
(b)They might have been damaged in transit.
(c)Quantities delivered may not agree with the invoice.
(d)They might have been received quite late (off-season).
(e)They might not be as per the samples or specifications.
(f)There may be a breach of agreement.
Format for Purchases Return Book
Illustration 3
Illustration 4
Note:
Post the entries by your own…
Format For Sales Book
Illustration 5
Format for Sales Return Book
Illustration 6
Illustration 7
Cash Book
 All the cash transactions are recorded first in the cash
book.
 It is therefore a subsidiary book.
 When cash book is maintained, there is no need for
preparing cash account and bank account in the ledger
because in the cash book cash receipts and cash
payments are compared and the cash and bank
balances at the end are arrived at.
Importance of cash book
 (i) Serves as both journal and ledger When cash book is maintained, it is not
necessary to open a separate cash account in the ledger. Thus, cash book
serves the purpose of a journal and a ledger.
 (ii) Saves time and labour When cash transactions are recorded through journal
entries, a lot of time and labour will be involved. To avoid this, all cash
transactions are straightaway recorded in the cash book, which saves time and
labour.
 (iii) Shows the cash and bank balance It helps to know the cash and bank
balance at any point of time by comparing the total cash receipts and cash
payments.
 (iv) Benefit of division of labour As cash book is a separate subsidiary book, an
independent person can maintain it. Hence, business can get the benefit of
division of labour.
Importance of cash book
 (v) Effective cash management Cash book provides all information
regarding total receipts and payments of the business concern during a
particular period. It helps in formulating effective policy for cash
management.
 (vi) Prevents errors and frauds Balance as per cash book and the balance
in the cash box can be compared daily. If there is any deficit or surplus, it
can be found easily. It helps in preventing any fraud or error in cash
dealings.
Types of cash book
The main cash book may be of various types and
following are the three most common types.
(i) Simple or single column cash book (only cash
column)
 (ii) Cash book with cash and discount column
(double column cash book)
(iii) Cash book with cash, discount and bank
columns (three column cash book).
Single column cash book
Single column cash book or simple cash book,
like a ledger account has only one amount column,
i.e., cash column on each side. Only cash
transactions are recorded in this book.
Format for single Column Cash Book
Illustration 8
Double column cash book (Cash book
with cash and discount column)
 The cash columns should be balanced as usual and the balance should be carried
forward to the next date or period.
 However, discount columns are not to be balanced. They are to be totalled on the
debit side and credit side separately.
 The total of discount column on the debit side represents total discount allowed to
customers and is debited to discount allowed account.
 The periodical totals of discount columns are posted as under:
 Debit Discount allowed account as ‘To Sundry Accounts as per Cash book’, with
the periodical total of the discount allowed column.
 Credit Discount received account as ‘By Sundry Accounts as per Cash Book’
with the periodical total of the discount received column.
Difference between Cash discount and
Trade discount
Format for Double column cash book
Illustration 9
Three column cash book (Cash book with
cash, discount and bank column)
 A three column cash book includes three amount columns on
both sides, i.e., cash, bank and discount.
 This cash book is prepared in the same way as simple and
double column cash books are prepared.
 The transactions which increase the cash and bank balance
are recorded on the debit side of the cash and bank columns
respectively.
 All the transactions which decrease the cash and bank
balance are recorded in the cash and bank columns on the
credit side.
 The balancing figures will be the closing balances of cash and
bank. Cash will always have debit balance.
Format for Three column cash book
Illustration 10
Subsidiary Books Guide
Subsidiary Books Guide

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Subsidiary Books Guide

  • 2. Meaning of subsidiary books Subsidiary books are sub-divisions of journal in each of which transactions of similar nature are recorded. These are the books of prime entry. Instead of recording in one journal, the transactions are recorded in a number of prescribed books.
  • 4. Advantages of subsidiary books (i) Proper and systematic record of business transactions (ii) Convenient posting (iii) Division of work (iv) Efficiency (v) Helpful in decision making (vi) Prevents errors and frauds (vii) Availability of requisite information at a glance (viii) Detailed information available (ix) Saving in time (x) Labour of posting is reduced
  • 7. In the books of Shanthi Furniture Mart Purchases book / Purchases journal
  • 9.
  • 10.
  • 11. Purchases returns book After purchases of goods, the business unit may find that some of the goods are not upto the satisfactory level because of the following reasons: (a)Goods may be defective. (b)They might have been damaged in transit. (c)Quantities delivered may not agree with the invoice. (d)They might have been received quite late (off-season). (e)They might not be as per the samples or specifications. (f)There may be a breach of agreement.
  • 12. Format for Purchases Return Book
  • 14.
  • 15.
  • 17. Note: Post the entries by your own…
  • 20.
  • 21.
  • 22. Format for Sales Return Book
  • 24.
  • 25.
  • 27.
  • 28.
  • 29.
  • 30.
  • 31.
  • 32. Cash Book  All the cash transactions are recorded first in the cash book.  It is therefore a subsidiary book.  When cash book is maintained, there is no need for preparing cash account and bank account in the ledger because in the cash book cash receipts and cash payments are compared and the cash and bank balances at the end are arrived at.
  • 33. Importance of cash book  (i) Serves as both journal and ledger When cash book is maintained, it is not necessary to open a separate cash account in the ledger. Thus, cash book serves the purpose of a journal and a ledger.  (ii) Saves time and labour When cash transactions are recorded through journal entries, a lot of time and labour will be involved. To avoid this, all cash transactions are straightaway recorded in the cash book, which saves time and labour.  (iii) Shows the cash and bank balance It helps to know the cash and bank balance at any point of time by comparing the total cash receipts and cash payments.  (iv) Benefit of division of labour As cash book is a separate subsidiary book, an independent person can maintain it. Hence, business can get the benefit of division of labour.
  • 34. Importance of cash book  (v) Effective cash management Cash book provides all information regarding total receipts and payments of the business concern during a particular period. It helps in formulating effective policy for cash management.  (vi) Prevents errors and frauds Balance as per cash book and the balance in the cash box can be compared daily. If there is any deficit or surplus, it can be found easily. It helps in preventing any fraud or error in cash dealings.
  • 35. Types of cash book The main cash book may be of various types and following are the three most common types. (i) Simple or single column cash book (only cash column)  (ii) Cash book with cash and discount column (double column cash book) (iii) Cash book with cash, discount and bank columns (three column cash book).
  • 36. Single column cash book Single column cash book or simple cash book, like a ledger account has only one amount column, i.e., cash column on each side. Only cash transactions are recorded in this book. Format for single Column Cash Book
  • 38.
  • 39. Double column cash book (Cash book with cash and discount column)  The cash columns should be balanced as usual and the balance should be carried forward to the next date or period.  However, discount columns are not to be balanced. They are to be totalled on the debit side and credit side separately.  The total of discount column on the debit side represents total discount allowed to customers and is debited to discount allowed account.  The periodical totals of discount columns are posted as under:  Debit Discount allowed account as ‘To Sundry Accounts as per Cash book’, with the periodical total of the discount allowed column.  Credit Discount received account as ‘By Sundry Accounts as per Cash Book’ with the periodical total of the discount received column.
  • 40. Difference between Cash discount and Trade discount
  • 41. Format for Double column cash book
  • 43.
  • 44. Three column cash book (Cash book with cash, discount and bank column)  A three column cash book includes three amount columns on both sides, i.e., cash, bank and discount.  This cash book is prepared in the same way as simple and double column cash books are prepared.  The transactions which increase the cash and bank balance are recorded on the debit side of the cash and bank columns respectively.  All the transactions which decrease the cash and bank balance are recorded in the cash and bank columns on the credit side.  The balancing figures will be the closing balances of cash and bank. Cash will always have debit balance.
  • 45. Format for Three column cash book