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Subsidiary Books
Generally, transactions are of two types:
Cash and Credit. Cash transactions can be grouped in one category whereas credit transactions can be grouped in another category. Thus, in practice, the main journal is sub-divided in such a way that a separate book is used for each category or group of transactions which are repetitive and sufficiently large in number.
Each one of the subsidiary books is a special journal and a book of original or prime entry. Though the usual type of journal entries are not passed in these sub-divided journals, the double entry principles of accounting are strictly followed.
Kinds of Subsidiary Books
The number of subsidiary books may vary according to the requirements of each business. The following are the special purpose subsidiary books.
i. Purchases Book records only credit purchases of goods by the trader.
ii. Sales Book is meant for entering only credit sales of goods by the trader.
iii. Purchases Return Book records the goods returned by the trader to suppliers.
iv. Sales Return Book deals with goods returned (out of previous sales) by the customers.
v. Bills Receivable Book records the receipts of bills (Bills Receivable).
vi. Bills Payable Book records the issue of bills (Bills Payable).
vii. Cash Book is used for recording only cash transactions i.e., receipts and payments of cash.
viii. Journal Proper is the journal which records the entries which cannot be entered in any of the above listed subsidiary books.
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