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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.
Types of Subsidiary Books
The subsidiary books are of various types which suit the needs of an organization. The types are as follows:
Subsidiary Books of Accounts
The Subsidiary Books are the books of Original Entry. These books are also called Day Books or special journals. We record the transactions in this book which are of similar nature, the recordings are done in chronological manner in Subsidiary Books. Subsidiary books actually are helpful in overcoming the limitations of journal books or journal entries.
Subsidiary Books Format
Format of Purchase Book
|
Date |
Invoice No. |
Name of the Supplier |
L.F |
Details |
Total Amount |
Format of Sales Book
|
Date |
Invoice No. |
Name of the Customers |
L.F |
Details |
Total Amount |
Format of Purchase Return Book
|
Date |
Debit Note |
Particulars |
L.F |
Details |
Total Amount |
Format of Sales Return Book
|
Date |
Credit Note |
Particulars |
L.F |
Details |
Total Amount |
Format of Bills Receivable Book
|
No. of Bill |
Date of Received |
Date of Bill |
From whom Received |
Drawer |
Acceptutor |
Where Payable |
Acceptor |
Where Payable |
Term |
Cash Book Folio |
Remarks |
|
Date |
Cash Book Folio |
Remarks |
Format of Bills Payable Book
|
No. of Bill |
Date of Bill |
To Whom Given |
Drawer |
Payee |
Where Payable |
Term |
Due Date |
L.F |
Amount Paid |
Date |
Cash Book Folio |
Remarks |
Advantages of Subsidiary Books
The advantages of the subsidiary book are as follows:
1. Proper With Systematic Record of the Business Transactions
The business transactions are classified and grouped properly in cash and non-cash transactions, these are further classified as credit purchases, credit sales, and returns, etc. The books facilitate individual transactions, as they can be properly and systematically recorded in the subsidiary books.
2. Convenience While Posting
The transactions of a nature are recorded at a single place, in one of the subsidiary books. Example, all the credit purchases of the goods are recorded in the purchases book while all the credit sales of goods are recorded in the sales book.
3. Efficiency
The work is being divided here which gives the advantage of specialization. When the same work is done by a person repeatedly and continuously the person becomes efficient in handling it.
4. Helpful in Decision Making
Subsidiary books provide accurate and complete details about each type of transaction separately. Thus, the management can use the information as the basis for deciding the future actions.
5. Errors and Frauds are Prevented
The Internal check becomes more effective as now the work can be divided in such a manner, where the work of one person is automatically checked by another person. With this internal check, the possibility of occurrence of the errors or fraud may be avoided and to the least minimized.
6. Availability of Requisite Information at a Glance
The transactions are entered in only one journal thus, it becomes difficult to locate the information about a particular item. When the subsidiary books are maintained, the details about a particular type of transaction can be easily obtained from the subsidiary books. The maintenance of these subsidiary books helps in obtaining the necessary information at a single glance.