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BUSINESS ACCOUNTING
Unit -3 : SUBSIDIARY BOOK
Dr. J.Mexon,
Department of Management,
Kristu Jayanti College, Bengaluru.
Contents
Introduction to Subsidiary book
Preparation of Simple Cash book
Double column Cash book
Triple column Cash book
Simple Petty Cash book
Analytical Petty Cash book
Imprest System
Subsidiary Book
• Accounting is indeed a tedious task. For this the companies who have
an abundant financial transaction in a year to journalize them all is
really bothersome. Hence, the companies prepare the subsidiary
books, where the recording of the transactions of a similar nature is
done in a chronological manner.
• The Subsidiary books are known as the books of original entry. In
daily business transactions, a majority of the transactions are either
related to sales, or to purchases or to cash. Thus, we record the
transactions of the same or similar nature in one place, that place is a
subsidiary book. We record the transactions chronologically to
facilitate the accountant.
Benefits of Subsidiary Book
• Reduction in work: Overall work is less compare to single
journal.
• Permits group work: Carried on by many accountants
• Accuracy: Accounts will be more accurate because of
specialized work and monthly summarized postings.
• Better Information: A lot of useful data like total credit sales,
credit purchase, returns etc., is available.
• Cash book preparation: Cash book itself takes place of
journal as well as ledger account.
Basic Documents in Subsidiary Books
• Inward invoice: Sent by suppliers of goods (Goods sent, price,
discount etc.), Basis of Purchase book.
• Outward invoice: Sent by the firm to the customers(goods supplied,
price, discount etc.). Basis of Sales book.
• Debit Note: When goods purchased from suppliers are returned, a
debit note is sent to them showing the goods returned and their
value. Basis for Purchas return book.
• Credit Note: When customers return goods, a credit note is prepared
by the firm. Basis for Sales returns book.
• Cash receipt and vouchers: Vouchers and receipts for cash received
and paid. Useful for Auditing purpose.
Purchase Book
• Purchase book is also known as ‘bought book’ ‘purchase day
book’ ‘invoice book’ and ‘purchase journal’.
• All credit purchases of goods are recorded.
• Cash purchase of goods and credit or cash purchase of assets
are ignored.
• Inward invoice is basis for entries.
• It can provide the total credit purchases any time it is
needed. It saves time, labour and provide more
comprehensive information.
Date Name of the
Supplier
LF Inward
Invoice
No.
Details
(Rs.)
Amount
(Rs.)
Sales Book
• Sales book is also known as ‘Day book’ ‘Sold book’ and ‘Sales
journal’.
• All credit sales of goods are recorded.
• Cash sales of goods and credit sales of assets are ignored.
• Outward invoice is basis for entries.
• It can provide the total credit sales any time it is needed. It
saves time, effort and provides more useful information for
decision making.
Date Name of the
Customer
LF Outward
Invoice No.
Details
(Rs.)
Amount
(Rs.)
Purchase Return Book
• It also called ‘Returns outward book’ and ‘Purchase returns
journal’.
• Goods returned to suppliers which were originally purchased
on credit are recorded.
• Debit note sent by the firm to the suppliers is basis for entry.
• It can provide details of total purchase return at any given
time. It saves time and effort in the recording and posting of
the returns.
Date Name of the
Supplier
LF Debit
Note No.
Details
(Rs.)
Amount
(Rs.)
Sales Return Book
• It also called ‘Returns Inward book’ and ‘Sales returns
journal’.
• Goods returned by customers which were originally sold on
credit are recorded.
• Credit note sent to the customers after receiving goods
returned by them.
• It can provide details of summarized returns from credit
customers at any given time. It saves time and effort in the
recording and posting of the returns.
Date Name of the
Customer
LF Credit
Note No.
Details
(Rs.)
Amount
(Rs.)
Cash Book
• In subsidiary book system, the entire work relating to cash
and bank transactions is minimized and simplified through
Cash book.
• Cash book serving as a subsidiary book and also as a ledger
account.
• It is the book of original entry because receipts and
payments are recorded in the cash book and they are posted
to the different accounts in the ledger.
• Cash book also serves the purpose of ledger , there is no
need to open cash account in the ledger.
1. Simple Cash book or Single column Cash book
2. Two Column Cash book (with cash and discount
column)
3. Two Column Cash book (with bank and discount
columns)
4. Three Column Cash book with cash, bank and
discount columns
1. Simple Cash Book: It contains both debit side and
credit side. Showing all receipts of cash on debit and
payments of cash on credit side. Debit side is called
‘Receipt side’ and Credit side is called Payments side.
Date Particulars R.N L.F Amount Date Particulars V.N L.F Amount
2. Two Column Cash book (with cash and discount
column): It almost like simple cash book. However, on
the debit side as well as on credit side, a discount
column is maintained.
Date Particulars R.N L.F Discount
Allowed
Cash Date Particulars V.N L.F Discount
Received
Cash
3. Two Column Cash book (with bank and discount columns):
Big concerns make all payments through cheque, such
companies maintain cash book with bank and discount
columns. Cheque issued are shown in payment side and
Cheque received and deposited shown in receipt side,
4. Three Columnar Cash book: On both sides of the cash book,
separate columns are opened for discount, cash and bank.
Date Particulars R.
N
L.F Discount
Allowed
Cash Bank Date Particulars V.
N
L.F Discount
Received
Cash Bank
Petty Cash Book
• Petty is a derivation of the French word ‘PETTI’ which means
small. So it is meant to be a small cash book (recording small
payments).
• A Small payments like postage, stationery, cartage,
refreshments, cleaning etc. recorded here.
• Petty cashier will maintain this book.
• Main purpose is to relieve the burden of main cashier and
avoid cluttering of the cash book with numerous small
payments.
Imprest System
• The amount which may be needed during a specific period (for a
month) for small payments is estimated and fixed as ‘Imprest
Amount’.
• It can be revised periodically with growth and expansion in payments.
• St the beginning of the period imprest amount handed over to petty
cashier and he records payments in petty cash book.
• At the end of the period he submits the account and voucher.
• For example, if imprest amount is Rs.2,000 p.m., the petty cashier has
a closing balance of Rs. 280 in his hand, he has spent Rs. 1720 during
the month.
Analytical Petty Cash book or Columnar Petty Cash book
• It was devised to make petty cash payments more organized
and recording more convenient and efficient.
• All petty cash payments classified into limited number of
homogeneous and compact group.
• Each group with a column for overall total expenditure.
• Left hand side shows opening balance(amount received from
cashier) and right hand side shows total payments and
analytical column s for different group of expenses.
• At the end receipts and payment columns are balanced.
Amount
Received
C.B.F.N Date Particulars V.N Total
Payments
Bills Receivable Book
• It is used to record the full details of bills received from customers
and others.
• Records the bill drawn by the firm on customers who accept them
and also bills endorsed in favour of the firm by customers.
• Entries made in the book whenever bills are received.
S.
No.
Date of
Receipt
From
whom
Received
Name of
Acceptor
Where
Payable
Date of
bill
Term When
due
L.F. Amount Remarks
Bills Payable Book
• It is used to record the full details of bills payable accepted by the
firm.
• Records all the bills accepted by the firm in favour of suppliers or
others.
• Entries are made in the bills payable book whenever bills payable are
accepted.
S.
No.
Date of
Bill
Name of
Drawers
Name of
Payee
Term When
Due
L.F. Amount Remarks
General Journal or Journal Proper
This is the Residual book under subsidiary book system. All those
business transactions which cannot be recorded in any of the other
subsidiary books are recorded in the form of journal entries in the
general journal and the entries are posted to ledger. The following are
the important transactions which are usually recorded in journal
proper.
• Credit purchase and sale of assets
• Purchase of business
• Expenses shown by analytical columns of petty cash book
• Transfer entries
• Closing entries
• Adjustment entries
Thank you

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Subsidiary Book

  • 1. BUSINESS ACCOUNTING Unit -3 : SUBSIDIARY BOOK Dr. J.Mexon, Department of Management, Kristu Jayanti College, Bengaluru.
  • 2. Contents Introduction to Subsidiary book Preparation of Simple Cash book Double column Cash book Triple column Cash book Simple Petty Cash book Analytical Petty Cash book Imprest System
  • 3. Subsidiary Book • Accounting is indeed a tedious task. For this the companies who have an abundant financial transaction in a year to journalize them all is really bothersome. Hence, the companies prepare the subsidiary books, where the recording of the transactions of a similar nature is done in a chronological manner. • The Subsidiary books are known as the books of original entry. In daily business transactions, a majority of the transactions are either related to sales, or to purchases or to cash. Thus, we record the transactions of the same or similar nature in one place, that place is a subsidiary book. We record the transactions chronologically to facilitate the accountant.
  • 4. Benefits of Subsidiary Book • Reduction in work: Overall work is less compare to single journal. • Permits group work: Carried on by many accountants • Accuracy: Accounts will be more accurate because of specialized work and monthly summarized postings. • Better Information: A lot of useful data like total credit sales, credit purchase, returns etc., is available. • Cash book preparation: Cash book itself takes place of journal as well as ledger account.
  • 5. Basic Documents in Subsidiary Books • Inward invoice: Sent by suppliers of goods (Goods sent, price, discount etc.), Basis of Purchase book. • Outward invoice: Sent by the firm to the customers(goods supplied, price, discount etc.). Basis of Sales book. • Debit Note: When goods purchased from suppliers are returned, a debit note is sent to them showing the goods returned and their value. Basis for Purchas return book. • Credit Note: When customers return goods, a credit note is prepared by the firm. Basis for Sales returns book. • Cash receipt and vouchers: Vouchers and receipts for cash received and paid. Useful for Auditing purpose.
  • 6. Purchase Book • Purchase book is also known as ‘bought book’ ‘purchase day book’ ‘invoice book’ and ‘purchase journal’. • All credit purchases of goods are recorded. • Cash purchase of goods and credit or cash purchase of assets are ignored. • Inward invoice is basis for entries. • It can provide the total credit purchases any time it is needed. It saves time, labour and provide more comprehensive information.
  • 7. Date Name of the Supplier LF Inward Invoice No. Details (Rs.) Amount (Rs.)
  • 8. Sales Book • Sales book is also known as ‘Day book’ ‘Sold book’ and ‘Sales journal’. • All credit sales of goods are recorded. • Cash sales of goods and credit sales of assets are ignored. • Outward invoice is basis for entries. • It can provide the total credit sales any time it is needed. It saves time, effort and provides more useful information for decision making.
  • 9. Date Name of the Customer LF Outward Invoice No. Details (Rs.) Amount (Rs.)
  • 10. Purchase Return Book • It also called ‘Returns outward book’ and ‘Purchase returns journal’. • Goods returned to suppliers which were originally purchased on credit are recorded. • Debit note sent by the firm to the suppliers is basis for entry. • It can provide details of total purchase return at any given time. It saves time and effort in the recording and posting of the returns.
  • 11. Date Name of the Supplier LF Debit Note No. Details (Rs.) Amount (Rs.)
  • 12. Sales Return Book • It also called ‘Returns Inward book’ and ‘Sales returns journal’. • Goods returned by customers which were originally sold on credit are recorded. • Credit note sent to the customers after receiving goods returned by them. • It can provide details of summarized returns from credit customers at any given time. It saves time and effort in the recording and posting of the returns.
  • 13. Date Name of the Customer LF Credit Note No. Details (Rs.) Amount (Rs.)
  • 14. Cash Book • In subsidiary book system, the entire work relating to cash and bank transactions is minimized and simplified through Cash book. • Cash book serving as a subsidiary book and also as a ledger account. • It is the book of original entry because receipts and payments are recorded in the cash book and they are posted to the different accounts in the ledger. • Cash book also serves the purpose of ledger , there is no need to open cash account in the ledger.
  • 15. 1. Simple Cash book or Single column Cash book 2. Two Column Cash book (with cash and discount column) 3. Two Column Cash book (with bank and discount columns) 4. Three Column Cash book with cash, bank and discount columns
  • 16. 1. Simple Cash Book: It contains both debit side and credit side. Showing all receipts of cash on debit and payments of cash on credit side. Debit side is called ‘Receipt side’ and Credit side is called Payments side. Date Particulars R.N L.F Amount Date Particulars V.N L.F Amount
  • 17. 2. Two Column Cash book (with cash and discount column): It almost like simple cash book. However, on the debit side as well as on credit side, a discount column is maintained. Date Particulars R.N L.F Discount Allowed Cash Date Particulars V.N L.F Discount Received Cash
  • 18. 3. Two Column Cash book (with bank and discount columns): Big concerns make all payments through cheque, such companies maintain cash book with bank and discount columns. Cheque issued are shown in payment side and Cheque received and deposited shown in receipt side, 4. Three Columnar Cash book: On both sides of the cash book, separate columns are opened for discount, cash and bank. Date Particulars R. N L.F Discount Allowed Cash Bank Date Particulars V. N L.F Discount Received Cash Bank
  • 19. Petty Cash Book • Petty is a derivation of the French word ‘PETTI’ which means small. So it is meant to be a small cash book (recording small payments). • A Small payments like postage, stationery, cartage, refreshments, cleaning etc. recorded here. • Petty cashier will maintain this book. • Main purpose is to relieve the burden of main cashier and avoid cluttering of the cash book with numerous small payments.
  • 20. Imprest System • The amount which may be needed during a specific period (for a month) for small payments is estimated and fixed as ‘Imprest Amount’. • It can be revised periodically with growth and expansion in payments. • St the beginning of the period imprest amount handed over to petty cashier and he records payments in petty cash book. • At the end of the period he submits the account and voucher. • For example, if imprest amount is Rs.2,000 p.m., the petty cashier has a closing balance of Rs. 280 in his hand, he has spent Rs. 1720 during the month.
  • 21. Analytical Petty Cash book or Columnar Petty Cash book • It was devised to make petty cash payments more organized and recording more convenient and efficient. • All petty cash payments classified into limited number of homogeneous and compact group. • Each group with a column for overall total expenditure. • Left hand side shows opening balance(amount received from cashier) and right hand side shows total payments and analytical column s for different group of expenses. • At the end receipts and payment columns are balanced.
  • 23. Bills Receivable Book • It is used to record the full details of bills received from customers and others. • Records the bill drawn by the firm on customers who accept them and also bills endorsed in favour of the firm by customers. • Entries made in the book whenever bills are received. S. No. Date of Receipt From whom Received Name of Acceptor Where Payable Date of bill Term When due L.F. Amount Remarks
  • 24. Bills Payable Book • It is used to record the full details of bills payable accepted by the firm. • Records all the bills accepted by the firm in favour of suppliers or others. • Entries are made in the bills payable book whenever bills payable are accepted. S. No. Date of Bill Name of Drawers Name of Payee Term When Due L.F. Amount Remarks
  • 25. General Journal or Journal Proper This is the Residual book under subsidiary book system. All those business transactions which cannot be recorded in any of the other subsidiary books are recorded in the form of journal entries in the general journal and the entries are posted to ledger. The following are the important transactions which are usually recorded in journal proper. • Credit purchase and sale of assets • Purchase of business • Expenses shown by analytical columns of petty cash book • Transfer entries • Closing entries • Adjustment entries