Subsidiary Books

Subsidiary Books Meaning

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 need of an organization. The types are as follows:

  • Cash book

  • Purchases book

  • Sales book

  • Purchases return or return outwards book

  • Sales return or return inwards book

  • Bills receivable book

  • Bills payable book

  • Journal proper

Subsidiary Books of Accounts 

The Subsidiary Books are the books of Original Entry. These books are also called Day Book 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 book 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

Acceptor

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 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. Conveniency While Posting

The transactions of a nature are recorded at a single place, in one of the subsidiary books. Example, like 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 specialisation. 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 minimised.

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.

FAQs (Frequently Asked Questions)

1. What Do You Mean By Books of Original Entry?

Ans. The Books of original entry is an accounting book or a journal where all the transactions are initially or originally recorded. The business transactions, are solved with great details and its descriptions are the first recorded in this book of original entry. Books of original entry refers to the accounting journals where the business transactions are generally recorded. The information in these books is later summarized and posted into a general ledger, from this the financial statements are produced.

Popularly, journal is known as the books of original entry because in this book, the business transactions are initially recorded at the very beginning.

2. What is Meant by Journal Proper?

Ans. Journal proper is a book of original entry, this is known as the journal also. In this miscellaneous credit transactions are recorded which do not fit in any other books which are recorded. This is also called the miscellaneous journal. The form and procedure for maintaining this type of journal is the same of the simple journal.

A Journal proper in an accounting system is the book of original entry where all type of miscellaneous credit transactions is recorded.


3. What is the Full Form of L.F?

Ans.  The meaning of LF or the full form of L.F is ledger folio number. Generally, the folios are used for the reference purpose or to divide the books into several parts. This term is also referred to as the number of pages in which the book or the document is recorded. A folio has similar applicability in the term of accounting. It is used in the financial journals and the ledgers to indicate the aligned entries.