Subsidiary Books 📚

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Subsidiary Books 📚 Explain it's advantages:-




     Generally, most of the transactions are of respective type in the business(ex: cash receipts, cash payments, Credit purchases; Credit sales; cash purchases; Credit purchases etc.) Therefore Transactions can be classified into different groups according to their nature. Generally transactions are of two types (1) Cash transactions (2)  Non- cash transactions. Cash receipts and payments can be grouped into one category whereas Credit purchases of goods can be grouped into one category whereas Credit purchases of goods can be grouped into another category and Credit sale of goods is yet another class. Thus, in practice. Journal is sub-divided into several Books 📚 to save time, labour and establishement cost  and they are called subsidiary Books 📚 or sub-division of journal. Each subsidiary Books is used to record transactions of similar nature ex: Cash transactions, Credit purchases, Credit sales; purchases returns; sales returns etc. Separate books 📚 are maintained in respect Bills receivable and Bills payable.


      When such transactions are more in any business it is very convenient to maintain a separate cash book 📚 to record cash receipts and cash payments. Cash transactions are therefore not entered in the journal but are directly entered in the cash book itself. The cash Book is therefore a book 📚 of original entry in the sense that cash transactions are entered in the cash book in the first instance in chronological order. A cash book 📚 is therefore an extension of journal. When cash Book is maintained there is no need to maintain cash account in the ledger.

       In addition to the above books, the journal proper is maintained to record all transactions that cannot be passed through any one of the above books.


      No journal entries are passed while recording transactions in subsidiary Books 📚. Under this system the transactions are entered in their respective journals and then directly post them into the ledger. This type of Accounting is also referred to as English System. The use of subsidiary Books is no way affects the fundamentals principals of Double Entry Book-keeping thus, we come across the following books is use in any modern business concern of big size.

1) The cash book 📚 to record all cash receipts and payments.

2) The purchases book to record all Credit purchases.

3) The sales book to record all Credit sales.

4) The returns outwards book (purchases returns) to record all goods returned by us to our suppliers.

5) The returns inwards book (sales return) to record all goods.

6) The bills receivable book to record all bills drawn by us and received by us.

7) The bills payable book to record all bills drawn by our Creditors and accepted by us.

8) journal proper to record all transactions which cannot be entered in any one of the above books.


Advantages sub-division of journal or subsidiary Books 📚:-

          The advantages of sub-division of journal may be summarized follows:


1. Saving of Time and Clerical Labour: Under sub-division of journal, there is no need to pass journal entries and write narrations in respect of entries in the special journals. Hence, saves a lot of time, clerical labour and stationery.


2. Division of Labour:- The division of journal into  several Books, resulting in sub-division of work, ensures more clerks working independently in recording all business transactions. Division of labour also gives the advantages of specialisation leading to effectively in maintaining of Accounts.


3. Easy Reference:- Since, similar Transactions are recorded in one place, reference is easier. It is very difficult to go through the entire journal to locate to locate an entry. But it is easiler to go through the subsidiary Books 📚.


4. Effective Internal Check:- Sub-division of journal helps the management to introduce an effective system of internal check in the business. Since, there are large number of Transactions two or three auditors can be appointed at a time to audit the accounts of the business.


5.Up-to-date Maintenance of Records and Books 📚:- Under this system a good number of clerks can be appointed to handle subsidiary Books 📚. Independently it is easy for them. In addition, this system helps the management to maintain up-to-date record and Account books.


6. Quick Decisions:- Sub-division of journal provide up-to-date information to the management in any aspect of the business. It helps the management to the quick Decisions in the business when occasion demands.

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