What is a Subsidiary Books Account? Types of Subsidiary Books

What is a Subsidiary Books Account?Types of Subsidiary Books
What is Subsidiary Book Account?
Meaning of subsidiary Book
There are numerous transactions which occur so many times in a day. It is inadequate and inconvenient to record all these transactions in a journal book. Every transaction recording in journal becomes thick, bulky, and tedious and consumes more labour, time and money. So the transactions which are of repetitive are recorded in a separate book through special journal. Such separate book of original entry. Maintained for recording the similar transaction like purchase sales etc. is called subsidiary books. It
Advantages of subsidiary book
• It enables to make of word among accounting personnel by assigning with separate books.
• Division of work to increase the efficiency of personnel as they performed same activities daily.
• It helps to save time and labour by recording the similar type of transaction together in a separate book.
• It is easy to access the detailed information as the transactions relating to one head are recorded in a separate book.
• It help in the internal check as the subsidiary book maintained by cleak is automatically checked by another clerk.
• It avoids the necessity of journal entries.
Limitation of subsidiary books
• It is expensive as it requires number of clerks to maintain the different subsidiary books.
• It does not keep the records of transaction in a chronological order.
• It is not suitable organizations as they have small volume of transactions.
Types of subsidiary books
The following are the importance types of subsidiary books.
• Purchase book
• Sales book
• Purchase return book
• Sales return book
• Cash book
• Petty cash book
Purchase book
Purchase book is also known as purchase journal or invoice book or bought book. This used to record the credit purchase of goods only. It does not record the cash purchase of goods. It also excludes the purchase of assets. This purchase book is prepared on the base of invoice of goods purchase.
Explanation of columns
• Date: it recorded the data of goods purchased.
• Particulars: it records the name of suppliers of goods description of goods and quantity, rate, amount and trade discount.
• Invoice No.: it records the invoice no. sent by the suppliers.
• Ledger folio: it show the page no. of ledger book where this account is located.
• Amount: it show the total of goods purchased. The details column is used to write the individual total of goods purchased.
Invoice
Invoice is a business document prepared by the seller or suppliers disclosing the details of goods. It shows the name and address of buyer and seller, quality and quantity, rate per unit trade and cash discount, and means and modes of payment. The seller prepares the invoice and sends to buyer along with the goods sold. Invoice is the major source document for preparing purchase book and sales book.
Discount
Discount is a concession or deduction given in the list price of goods purchase or in the amount of debt being paid. It is of two types:
Trade discount
Trade discount is a reduction made in the list price of goods purchase, given by the seller to the buyer. This type of discount is allowed when the large quantity of goods are purchase. It is not recorded in the books. While preparing the books of account, purchase transaction is recorded only after deducting trade discount. This discount is providing with a view of making bulky purchase of goods.
Cash discount
Cash discount is a reduction given in the amount of debt being paid. It is offered to the debtor by creditor to make the payment of debt before its stated time. This cash discount is expenses to the debtor and income to the creditor. So, cash discount is recorded in the books. This discount is given with a view of making early payment of debt.

is also called s sub-journal or specials journal or sub-division of journal, book, sales book, sales book, purchase return book, sales return book are the example of subsidiary books.

Different between trade discount and cash discount
Trade discount
1. It is not recorded in the books.
2. It is given on the list price of goods.
3. It is offered to make bulky purchase of goods.
Cash discount
1. It is recorded in the books.
2. It is given on the amount of debt being paid.
3. It is offered to make early payment of debt

Posting in the ledger from purchase book

Firstly, the transaction are recorded in the purchase book and then posted in the concerned accounting in the ledger book. The following accounts are opened with the help of purchase book.
Creditor's/ supplier's accounts
This account is credited by the individual amount s shown in purchase book with the word "By, purchase a/c". It is opened individually.
Purchase account
This is account is debited by the total amount of purchase book with the word, "to, Monday creditor's" or "to moonrise" cash purchase of goods is also debited in this account.
Sales book
The subsidiary book which records only the credit sale of goods is called books or sales journal. It does not record the cash sale of goods and the transactions relating with assets. The sales book is prepared on the basis of an invoice. Through this book, one can get information about the total credit sales of goods during a certain period of time. The specimen of sales book is as follows:
Explanation:
• Date: it records the date of goods sold.
• Particulars: it records the name & address of buyer, quantity, rate and trade discount of goods.
• Invoice No: it records the number of invoice.
• Ledger folio (L.F.): it shows the page no. of ledger books, where the account is transferred.
• Amount: it shows the total amount of sales transaction. The details column is used to write the individual total of goods sold.
Posting in the ledger from sales book
The following accounts are opened from the sales book.
Debtor's account/customer's account
The debtor a/c debited with the individual amount as shown in sales book with the word, "To, sales account".
Sales account
The total amount of sales book is credited to sales account with the word. "By sundry debtors". This account shows the total sales (both cash and credit) occurred during a certain period of time.
Purchase return book
The book in which all the return of goods purchase are recorded, is called as purchase return book. It is also known as return outward book. When the goods are found defective, damaged or not according to sample shown, they are returned to the suppliers. This purchase returned book is prepared on the basis of debit notes. The ruling of the purchase return book is as follows:
Explanation of columns
• Date: it records the date of goods returned.
• Particulars: it records the name of suppliers, description of goods, quantity, rate and trade discount.
• Debit notes No.: the number of debit note is writing in this column.
• Ledger folio (L.F.): it shows the page number of ledger book where the account of supplier is posted.
• Amount: it shows the total amount of goods returned.
• The details column is used to write the individual total of goods returned.
Debit note
Debit note is a document prepared by the buyer and sent to the supplier's information that his account is debited with the amount equal to the value of goods returned. It also disclosed the reasons of goods returned. A specimen of debit note is as follows:
Posting in the ledger from purchase return book
Suppliers account and purchase return book are opened with the help of purchase returned book.
• Supplier's/ creditor's account: this account is debited with the individual amount as shown in the purchase return book with the word. "To purchase return (a/c)
• Purchase return account: this account is credited with the total amount of purchase return book with the word, "By, sundry creditor".
Sales return book
It is a book which recorded only the return of goods that are sold on credit. Sales return book is also known as return inward book. Goods once sold may be returned if they are being defective, damaged or not according to samples shown. This sales return book is prepared on the basic of credit notes.
Credit note
a credit note is a document prepared by the suppliers after accepting the goods returned by the buyer and sent to the buyer information that his account is being credited with the amount of goods returned.
Different between debit note and credit note
Debit note

1. It is prepared by the buyer.
2. It is prepared for the purchase return.
3. Purchase return book is maintained on the basis of debit note.
Credit note
1. It is prepared by the seller.
2. It is prepared for the sales return.
3. Sales return book is maintained on the basis of credit note.

Posting in the ledger from sales return book
The following according are opened with the help of sales return book.
Debtor's/customer's account
This account is credited with the individual amount as show in the sales return book with the word "By sales return account."
Sales return account/return inward account
This account is debited with the total amount of sales return book the word "Too sundry debtors."