Subsidiary book

In the past, traders use to keep record of the transaction in the journal. But it was Later
found not convenient. If all the transaction are recorded in the journal then the journal book
becomes more thick and difficult to handle it. In big business houses, it becomes impossible to
carry on the work of recording business transaction. therefore now a days large scale business
firms like to keep record of transaction in subsidiary books instead of journal. Subsidiary books
are the book of original entry and it is also called primary records because the first entry of
transaction is made in subsidiary books. On the basis of subsidiary books postings are made into
concerned account afterwards.
Following types of books are used under subsidiary books.
1. Purchase book
2. Sales book
3. Cash book
4. Purchase return book
5. Sales return book
6. Bills received book

1. Purchase book
This book is used for recording goods purchased on credit. This book is also known as
invoice book, bought book or purchased journal. It must be noted that only credit purchases are
recorded in this book. Things purchased on credit for personal use are not recorded in this book.
It also does not record the fixed assets purchased.
It is not necessary to record the transaction in the journal book where they are enter in the
purchases book, because this book contains the name and address of seller, date of transaction
and amount of goods. After recording in purchases book separate amount is to be open in the
ledger for each supplier of goods. The amount of each purchase will be credited to its respective
personnel account.

Date Particular Invoice no. L.F Amount

2. Sales book
Sales book is used for recording goods sold on credit. When the trader sells goods on
credit then he should keep record in sales book to know how much goods have been sold, when
and to whom. Thus a sales book is prepared to know credit sales. If all the credit sales passed
through journal and post them in concern ledger then it takes time because for every debit, credit
also appears side by side. The record in sales book is made from the outward invoice book which
contain the exact copy of each invoice sent out to the customers. There are five columns in sales
book for date, particulars, outward invoice no. Ledger folio and amount. Name and address of
customer are written in particular column.

Date Particular Outward invoice no. L.F. Amount

3. Purchase return book

The book used for recording goods return for the seller is called "Purchase Return Book". It
is also known as return outwards Books. The buyer returns goods when he finds them damaged
or inferior in quality or against the sample. While retuning goods buyer prepares debit note. Debit
note is a letter sent by the buyer to the seller to inform about the adjustment of amount of goods
return in the buyer account and asking to the seller to adjust the amount in the account of seller.

Specimen of purchase return book

Date Particular L.F Debit notes Amount

4. Sales Return Book

It is a book used for recording goods returned by the buyer. It is also known as returns
inward book. Goods sold may be return by customer for various reasons such as goods sent of
wrong description or inferior quality or damaged. While keeping records in sales return books
sellers prepares a credit note. It is prepared and sent to buyer of goods to inform about the
adjustment of goods to inform about the adjustment of the amount of goods.
Specimen of Sales Return Book
Date Particular L.F. Credit Note Amount

5. Cash Books
In business firms there will be many transactions relating to cash. To record cash
transaction, separate book is kept which is called Cashbook. The function of cashbook is to keep
records of all cash transactions. All cash transactions are directly recorded in cashbook without
passing through other subsidiary books. Cashbook takes the place of cash account that is it is not
necessary to open separate cash account in the ledger after keeping record in the cashbook.
 The cashbook is closed and balanced in the same way as cash account in ledger. Cash book
always-present debit balance because more cash can't be paid than business have. After closing
the cashbook, the balance must again be shown on the debit side for the next month.
There are three types of cashbooks. They are-
Simple Cash Book
Double Column Cash Book
Triple Column Cash Book

I. Simple Cash Book:: Simple cash book is prepared like cash account in ledger. There are
eight columns. First four columns are for debit side and second four columns are for credit side.
All the cash received are entered in amount column on debit side and all cash paid appear on
credit side in amount column. Cash book is closed and balanced at the end of the month.

date Particulars L.F Amount Date Particular L.F Amount

continue to subsidiary book

II. Double Column Cash Book: A cashbook with discount column is called double column
cashbook. Two accounts, cash and discount are combined in this book. Discount allowed to the
customers represent loss. So it is recorded in discount column on debit side. In the same way
discount allowed by creditors represents gain. So it is recorded on credit side in discount column.
Form of double column cashbook:
Date L.F Discount Amount Date Particular L.F Discount Amount
Particular

III. Triple Column Cash Book: A cash book with discount and bank column is triple column
cashbook. Three accounts are combined. In business firm most of the payment are received and
paid by cheque. Transactions are preformed through bank. When business firm makes payment
its creditor by cheque then such payment are entered on credit side in bank column. In the same
way when amounts are deposited into bank and received cheque from debtors amounts are
posted on debit side in bank column. The advantage of this cashbook is that every time business
firm can know amount discharged from the bank.
Form of triple column cashbook
Date Particular L.F Discount Amount Bank Date Particular L.F Discount Amount Bank
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