[Commerce Class Notes] on What are Subsidiary Books? Pdf for Exam

In big organizations there are numerous transactions going on, in the midst of these transactions, it is not possible to keep and maintain a record of each and every business affair. While non-recording any minute transaction can be a havoc which the business will never resort to. This is when the subsidiary books come into the action and play as a saviour. 

Subsidiary books are nothing but an order of maintenance of recording similar natured transactions. Subsidiary books are the subdivisions of Journal. In this content, we will know in detail about these books and types of subsidiary books with its function.

Define Subsidiary Books 

Subsidiary Books are the books that record the transactions which are similar in nature in an orderly manner. They are also known as special journals or Daybooks. In big business institutions, it is not easy to record all the transactions in one journal and post them into various accounts. So, for the easy and accurate recording of all the transactions, the journal is subdivided into many subsidiary books. For every type of transaction, there is a separate book.

Types of Subsidiary Books

There are basically 8 types of subsidiary books that are used for recording different types of transactions. So, let us know the types.

The 8 Subsidiary books are as follows:

1. Cash Book

2. Purchase Book

3. Sales Book

4. Purchase Return Book

5. Sales Return Book

6. Bills Receivable Book

7. Bills Payable Books

8. Journal Proper

Set of Subsidiary Books – A Brief Study

1. Cash Book

The first and most important subsidiary book is the cash book. It records all the transactions related to cash and bank receipts and payments. There are 3 types of cash books that are maintained by an organization. They are:

Single Column Cash Book: A single column cash book is like a ledger account. It contains a debit side and a credit side. All Cash receipts are recorded on the debit side, and all the cash payments are recorded on the credit side of the cash book.

Format of Single Column Cash Book:

Double Column Cash Book: Double Column Cash Book is the same as that of Single Column Cash Book; only an extra column of discount is added on both the debit and credit sides of the cash book. It records discounts allowed on the debit side and discounts received on the credit side of the cash book.

The format of the double-column cash book is given below.

Triple Column Cash Book: Triple Column Cash Book contains all the columns of a double column cash book and also has an extra column for the bank. The format of the triple column cash book is given below:

2. Purchase Book

Purchase Book is a subsidiary book that is used to record all the transactions related to credit purchases. The purchases of the asset are never recorded in the purchase book. 

Format of Purchase Book:

3. Sales Book

The Sales Book records all the transactions related to credit sales. The sales book cannot record the sale of assets. The sales book format is given below.

4. Purchase Return Book

The purchase return book, also known as the return outward book, is used to record transactions of all the returns made to the supplier. A debit note is issued against every return and is recorded in the Purchase Return Book.

Format of Purchase Return Book:

5. Sales Return Book

The sales return book records all the transactions related to inward returns. It is also known as a return inward book. When the customer returns goods, a credit note is issued to the customer for every return, and it is recorded in the Sales Return Book.

Sales Return Book Format:

6. Bills Receivable Book

The Bills Receivable Book records all the transactions of bills drawn in favour of the business. The total of the bills receivable book is posted on the debit side of the Bills Receivable account. The Format of Bills Receivable Book is as follows.

7. Bills Payable Book

The Bills Payable Book records all the transactions related to bills that are drawn on the business and are payable by the business. The Bills Payable Books Format is as follows.

8. Journal Proper

There are certain transactions that cannot be recorded in any of the above-mentioned books; these transactions are termed miscellaneous transactions. So, the Journal Proper is used to record all the miscellaneous transactions. It includes transactions such as credit purchase and sale of assets, depreciation, etc.

Solved Examples on Subsidiary Books

In this section, we will be providing a few solved examples to make the content on subsidiary books clearer to our students.

Mentioned below is a five-set of transactions of Moksha Ltd. Company, we will determine the type of subsidiary books that will be used in recording each transaction. 

Transactions:

1. Purchase of goods from MA Ltd.

This is to be recorded in the Purchase Book.

2. Purchase of stationery in cash.

This is recorded in Cash Book.

3. Depreciation on buildings

Journal Proper is the book.

4. Sale of goods in exchange for cash.

Cash Book

5. Bad Debts from Banyan Tree Ltd. transaction

Journal Proper