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SUBSIDIARY BOOKS


SUBSIDIARY BOOK

CHAPTER 9

When number of transactions is larger, it is practically impossible to record all the transactions through one journal. Journal can be classified or sub-dividing into various special journals and general. These books are also known as subsidiary books. This sub-division becomes essential as the size of the business expands.


 SUBSIDIARY BOOK:

1 CASH BOOK:         a cash book is a special journal, which is used for recording all cash receipts and cash payments. The cash book or cash account has two sides: debit side(left hand side) for recording receipt of money; credit(right hand side) for recording payments of money. Cash book performs dual function of journal as well as ledger. All cash transactions are directly recorded in the cash book so it serves the purpose of journal. Every page on the cash book displays a cash book fulfils the functions of a subsidiary book as also a principle book.



Types of cash book The following are the different types of cash book.      
      
a)      Simple cash book. It records only receipts and payments of cash. It is like an ordinary cash account.

b)      Two(double) column cash book. This cash book has an addition discount column on each side

c)      Three column cash book or bank cash book. This types of cash book also contains one more column on each side for the bank transactions. This book provides additional information about the bank balance.


 PROFORMA OF THREE COLUMN CASH BOOK

         
DATE
PARTICUL;AR
L.F
DISC.
ALLOW.
CASH
BANK
DATE
PARTICULATR
L.F
DISC.
RECE.
CASH
BANK














The format of a cash book resembles the ledger a/c and consists of debit and credit columns. All the amounts received directly or by cheque, draft, money order is recorded on the debit side. All transactions in which cash is paid by the firm through cheque draft or money order are recorded on the credit side of the cash book.


2 purchase book/ purchase journal. Purchase of goods on credit in which the trader deals is recorded in the journal. For example, if a cloth merchant has purchased cloth on a credit basis that will be recorded in the purchase book, but if he has purchased furniture on credit, it will not appear in the purchase book since it is a purchase of an asset.

PRIOFORMA OF PURCHASE BOOK

DATE
PARTICULAR
INVOIICE NO.
L.F.
AMOUNT







3 SALES BOOK/SALES JOURNAL- A separate books in maintained to records all credit sales
Before entering the transactions in the sales book, it should be seen that the transaction satisfies the below mentioned two conditions.

1.      It is a sale of articles on credit basis.

2.      It is a sale of articles in which a businessman deals.

PROFORMA OF SALES BOOK

DATE
PARTICULAR
INVOICE NO.
LF.
AMOUNT








PROFORMA OF PURCHASE RETURN BOOK

DATE
PARTICULAR
DEBIT NOITE NO.
LF.
AMOUNT






DEBIT NOTE: When due to any reason a party was credited already and now going to debit his account without settlement of his account a documents is sent to him is called debit note. When the trader returns the material purchased for any reason, the net amount is calculated and the purchaser prepares a debit note. The amount is debited to supplier a/c and the debit note should be sent to him.


PROFORMA OF SALES RETURN BOOK

DATE
PARTICULAR
CREDIT NO.
LF.
AMOUNT






CREDIT NOTE: when due to any reason a party was debited already and now going to credit his account without settlement of his account a document is sent to him is called credit note. When the goods are sold on credit, an account is opened under the customer’s name and the total amount of goods sold is noted in the debit side of his account. When he returns the goods, his account should be credited with the exact amount of the goods returned. To inform the customer about this a credit note is prepared and sent to him.


ADVANTAGES OF SUBSIDIARY BOOKS:

No narration is required while writing in subsidiary books in journal entries. So, labour is reduced.

·         The accounting staff can record the transactions quickly and easily, as there are eight different books.

·         Efficiency and specialization can be attained as the work is classified and allocated to the accountants.

·         The rectification of error, if, becomes easy.

·         They will provide the information related to a particular transaction with in the stipulated time.
 


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