Subsidiary books are special books of original entry in which transactions of a similar nature are recorded together, instead of recording every transaction in one journal. In a large business there are too many transactions to record in a single journal, so the journal is divided into several smaller books, each meant for one kind of transaction. These smaller books are called subsidiary books or special journals. For example, all credit purchases are recorded in the purchases book and all credit sales in the sales book.
Subsidiary books are special books in which transactions of a similar nature are recorded together.
They are also called books of original entry or special journals.
The journal is divided into subsidiary books because a single journal is impractical for large businesses.
Main types: purchases book, sales book, purchases return book, sales return book and cash book.
Bills receivable book and bills payable book record bills of exchange.
The journal proper records transactions that do not fit other subsidiary books.
Advantages include division of work, specialisation, easy reference and better control.
Subsidiary books are the books of prime (original) entry in which transactions are first recorded before being posted to the ledger. Instead of using one journal for all transactions, a business divides it into several special books, each for a particular type of transaction.
This division is necessary because: • A large business has a huge number of transactions. • Recording all of them in one journal would be difficult and time-consuming. • Dividing work among several books allows different clerks to work at the same time.
Subsidiary books are also called 'books of original entry' or 'special journals'.
The main subsidiary books are:
Because of these advantages, almost all businesses use subsidiary books instead of a single journal.
Subsidiary books are special books of original entry in which transactions of a similar nature are recorded together. Instead of recording every transaction in one journal, a business divides the journal into several smaller books, each for one type of transaction — for example, the purchases book for credit purchases and the sales book for credit sales. They are also called special journals.
The main subsidiary books are: purchases book (credit purchases), sales book (credit sales), purchases return book (return outward), sales return book (return inward), cash book (cash and bank transactions), bills receivable book, bills payable book, and the journal proper for transactions that do not fit the other books.
Subsidiary books are used because a large business has too many transactions to record in a single journal. Dividing the work into special books lets different clerks work at the same time, makes each clerk specialised and efficient, saves time and labour, keeps similar transactions in one place, and makes checking and control easier.
The journal proper (or general journal) records transactions that cannot be entered in any of the other subsidiary books. These include opening entries, closing entries, adjustment entries, rectification of errors, and the credit purchase or sale of assets (not goods).
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