May 28, 2022

SB-Accounting

Accounting + Finance Blog

SUBSIDIARY BOOKS

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SUBSIDIARY BOOKS

Subsidiary books are books that transactions are recorded first before they are posted to the ledgers. It is also known as books of original entry and books of prime entry.

TYPES OF SUBSIDIARY BOOKS

(1) Sales day book
(2) Purchases day book
(3) Sales returns book/Returns inward book
(4) Purchases returns book/Returns outward book
(5) Journal
(6) Cash book
(7) Petty cash book

Journals, Cash book and petty cash book will be discussed seperately. Cash book and Petty cash book are dual books. They perform the purposes of a subsidiary books and also the purposes of a ledger book.

SALES DAY BOOK

Sales day book is also referred to as sales journal. This is the book were all credit sales are entered before posted to the turnover account and individual account receivables account. The source document used is the sales invoice.

READ ON  LEDGER AND ACCOUNTS

In the book, trade discounts are computed and the net is what is recorded as the sales figure. The total of this is posted to the turnover account in the general ledger.

PURCHASES DAY BOOK

Purchases day book also called purchases journal is a book used to enter credit purchases. The source document used is the purchase invoice.

RETURN INWARDS DAY BOOK

Also called sales return day book or journal. The source document used is the credit note and it records return inwards transactions.

RETURN OUTWARDS DAY BOOK

This book is used to record return inwards events. The source document for it is the debit note.

ADVANTAGES OF SUBSIDIARY BOOKS

(i) Subsidiary books record the total of transactions in one place rather than the individual accounts.

(ii) Explanation of the transactions recorded in the books. Example is the naration in a general journal.

READ ON  CONTROL ACCOUNT

(iii) Subsidiary books provide records of transactions in chronological order.

(iv) They also help to correct error. The total in the book of original entry can be reconciled with the total in the individual
accounts.

Further reading:

Statement of cash flow.

Differences between traditional marketing and digital marketing.

General journal .

IAS1-General purpose of financial statement.

Five ways to manage business risk.

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