SUBSIDARY BOOKS OF ACCOUNTS

A Journal is divided into separate books for the sake of convenience and to enable handing of
numerous transaction of repetitive nature. This facilitates easy working and curtails down the
voluminous work involved in the posting and entering each transaction in Journal & Ledger. All
similar transaction pertaining to one particular class is recorded one particular book. For
example, all transaction relating to credit purchases of goods are recorded in one book known as
Purchase Day Book; similarly all transactions relating to credit sales of goods are recorded in
Sales Day Book.
The name subsidiary books are as follow:
(i)

Cash Book (Cash Journal): To record all transactions in cash or by cheques. Cash-book
may be also of two columns.
(ii) Petty Cash Book: To record all cash transactions of petty expenses.
(iii) Purchase Day Book: To record all transactions of goods purchased on credit.
(iv) Sales Day Book: To record all transactions of credit sales of goods.
(v) Purchase return Book: To record all transactions relating to return of goods to suppliers.
(vi) Sales Return Book: To record all transactions relating to return of goods by the customers.
(vii) Bill Receivable Book: To record all transactions relating to Bill Receivables.
(viii) Bill Payable Book: All Transactions relating to acceptance of bills are recorded in this book.
(ix) Journal Proper: In Journal proper are recorded all transactions other than those recorded
above.

Cash Journal: Cash Journal (Cash Book) is for recording all day to day transactions.

Generally
cash transactions are numerous. All credit transactions are finally settled by cash. If like all other
transactions cash transactions are also recorded primarily in Journal. So the Cash book is the substitute for
the Cash Account. In fact, no separate Cash account is opened in the ledger; cash book serves the purpose
of the cash account.
According to Spicer & Pegler, The cash book is in fact a ledger version, but due to the huge amount of
entries completed in that, it is reserved in a separate book, this is known as a cash book, which is used
also as a book of principal entry.
Cash Book is of various type; which are as follows:
(a)
(b)
(c)
(d)

Simple cash Book

Cash Book with Book Column
Cash Book with Bank and Discount column.
Multi column Cash Book.

Simple Cash Book: Only Cash receipts and cash payments are recorded in this book. It is
just like a ledger; left side being debit side and right side being the credit side. Excess of
debit side over the credit side represents balance of cash in hand. Similarly the Cash
Book opens with opening cash on hand as the opening entry on the debit side.
Specimen of Simple Cash Book

Dr.

Cr.

Date

Payments

L.F.

Amt. (Rs.)

Date

Receipt

L.F

Amt. (Rs.)

Two Columnar Cash Book: This Cash Book contains an additional column for the purpose of
entering the transactions relating to bank. All banks transactions regarding deposits of cash and
cheques and payment by cheques and withdrawals in cash are entered in the bank column.
Three Columnar Cash Book: This Cash book contains an additional column for entering the
discount amount paid and received on account of various transactions. This column dispenses
with the opening of discount column in the ledger.
Multi Columnar Cash Book: This Cash Book contains various columns for recording the
transactions of receipts and payments under various heads of accounts. This Cash Book is more
used in school, colleges, hospitals, government offices etc.There is no need of opening cash
account in the Ledger as the Cash Book serves the purpose of cash account. However, the other
accounts, which are affected by cash receipts and payments, are posted in the concerned accounts
in the Ledger.

It is one of the main Special Journal for the following reasons:

In an enterprise, the number of cash transactions is pretty bulky and has to pay for
salaries, rent, purchase of goods and it has to receive the cash for sales of goods and
capital assets.

Chance for fraud is bit high compare to other assets, therefore strict internal control is
required and a properly maintained cash book should be maintained in order to overcome
this objective.

Cash is the main object in any enterprise. Timely payments to supplier will boost the
reputation of the enterprise. Likewise timely cash collection from the customers also will
help to improve the financial position and liquidity of the business.

Petty Cash Book: In any business, a number of transactions are of petty nature involving petty
payments. If the main cash book is used for this, the recording becomes voluminous and heavy; involving
considerable wastage of time. Hence a petty cash Book is maintained in which all the petty expenses like
postage, refreshment, stationery, cartage, etc. are recorded. Petty Cash Book can also have analytical
columns for recording the expenses head-wise. This enables easy posting in the ledger since the petty
payments are grouped and recorded head-wise under different columns.

Purchases Book (Purchases Journal):

In this book, recorded all the credit

transactions only relating to the purchases of the goods in which the business is dealing in.
Therefore, purchase of furniture, machinery or other assets purchased on credit are not recorded
in this book. All credit purchases of goods are recorded in the Purchases Journal whereas cash

purchases are recorded in the Cash Book. Other purchases such as purchases of office
equipment, furniture, building, are recoded in the Journal Proper (General Ledger) if purchased
on credit or in the cash book if purchased for cash. The source documents for recording entries in
the book are Invoices or Bills received by the firm from the supplies of the goods. Entries are
made with the net amount of the Invoice. Trade discount and other details of the Invoice need not
be recorded in this book. The monthly total of the Purchases Book is posted to the debit of
purchases account in the ledger. Individual suppliers accounts may be posted daily.
Purchases Return Book (Journal): The goods which are purchased on credit may be
returned by the purchaser if he finds these are defective or if they are not as per
specifications. Such returns are entered in the returns outward book or purchases returns
book. It may be noted that only those transactions which relate to the goods in which the
business in dealing in is recorded in this book.
Sales Book (Journal): In this book is recorded all the credit sales transactions relating to the
goods dealt with by the business. If furniture, machinery or other assets are sold on credit
then they are not recorded in this book. All credit sales are recorded in the Sales Journal.
Cash sales are recorded in the cash book. The source document for recording entries in
the Sales Journal are Sales Invoice or bill issued by the firm to the customers. The date of
sale, invoice number, name of the customer and amount of the invoice are recorded in the
sales journal. Other details about the sales transaction including terms of payment are
available in the invoice. In fact, two or more than two copies of a sales invoice are
prepared for each sale. The book keeper makes entries in the sales journal from one copy
of the sales invoice. In the sales journal, one additional column may be added to record
sales tax (if applicable) recovered from the customer and to be paid to the government
within the stipulated time. Periodically, at the end of each month the amount column is
total led and posted to the credit of sales account in the ledger. Posting to the debit side of
individual customers accounts may be made daily.
Sales Return Book (Journal): In this book is recorded the return of goods which have been earlier
sold on credit. This book is also known as returns outward book. Only the transactions relating to
the goods dealt with by the businessmen are recorded.

Bill Receivable Book: The bills which have been drawn by the businessman but accepted by the
other party are known as Bill Receivable and are entered in this book.

Journal Proper
If a transaction is such that it cannot be recorded in any of the books mentioned above, then it is recorded
in a book, which is called journal proper, If a transaction is not related with Cash Book, Petty Cash Book,
Purchases Book, Purchases Return Book, Sales Book, Sales Return Book, Bill Receivable Book, or Bill
Payable Book, then it is recorded in this book which is known as Journal Proper.