CONCEPT OF PRIMARY BOOKS AND SUBSIDIARY BOOKS

Any student of accountancy is familiar with two things of the subject, namely "Journal" and
"Ledger". the student is also familiar with the format of the two and the manner in which
accounting entries are passed in them. However, very few students are aware of the concepts
underlying them. they are equally unaware of the accounting procedure. This post is aimed at
clearing that very concept.

First we must understand the role of journal and ledger in the accounting cycle. Accounting
for any transaction begins with passing an entry in the journal. There are separate journals for
recording different types of entries. these journals are collectively known as "Books of prime
entry”, “Books of original entry" and "Subsidiary books". These are called by the first two
names because all transactions are first recorded in these books. The third name indicates that these
are subsidiaries of the Journal. There are eight types of Subsidiary books.

Next comes Ledger. Ledger is the prepared with the total amounts of the different subsidiary
books. for example, the total of purchase journal is posted to the debit side of purchase account.
In other words, the totals of the different ledgers will be transferred to ledger accounts of the same
name. Ledger too is known by three names: "Primary books" and "Books of secondary entry"
and "Principal books". Ledger is known as a primary book and principal book because it is from
ledger balances that trial balance and final accounts are prepared. It is called a secondary book
because it is prepared after the journal and on the former's basis. Hence it is subsidiary to the
journal. The balances of the ledger accounts are used in preparation of the final accounts of the
organization.

DIFFERENT TYPES OF SUBSIDIARY BOOKS(JOURNALS)

There are eight different types of subsidiary books:

1. Purchase Day Book- For recording credit purchases

2. Sales Day Book- For recording credit sales
3. Purchase Return Book- For recording purchase returns
4. Sales Return Book- For recording sales returns
5. Bills Receivable Book- For recording all Bills of exchange receivable
6. Bills Payable Book- For recording all Bills of exchange payable
7. Cash Book-For recording all transactions made in cash
8. Journal Proper- For recording all those entries which do not come in the above seven
types of journals.

Cash Book is both a book of prime entry and a book of secondary entry. This is because
all cash transactions are first recorded in the Cash Book and it is from the Cash Book only that
the balance of cash is recorded in the final accounts. Cash book is thus both a journal and a
ledger. Hence Cash Book is a JOURNALISED LEDGER.