December 6, 2021


Accounting + Finance Blog

Types of Subsidiary (Prime) Books you should know


Although accounting software may not require the posting of the traditional types of subsidiary books, however, these books are the basis for recording business transactions in a firm’s books of accounts. The six subsidiary books are explained below.

Six types of subsidiary books

Sales Daybook

This book records the day to day credit sales transactions that occur in a business. It does not include cash transactions.

Purchases Daybook

It is used to record credit Purchases of goods that occur often in business. The goods must be the ones the business sells every day.

Returns Inwards Daybook

It is also referred to as sales return Daybook. It is called so because the returns are as a result of sales. Return inwards book records the value of the goods that were returned by a customer who has purchased goods earlier.

READ ON  Errors in Accounting: meaning and Key Explanations

Returns Outward Daybook

Also called Purchases returns Daybook. This is used to record goods returned by the business to its suppliers. The goods were previously purchased. But, the firm sees the need to returned it due to customers complaints, damages and so on.

Cash Book

A cash book is used to record business transactions that are done in cash. Unlike Daybooks, it does not record credit transactions. The cash book records sales and purchases that the transactions are on a cash or through the bank. It also records cash received or paid to customers and suppliers respectively. More to it other cash received and payments for expenses by cash or through the bank goes to this book.

Petty Cash Book

This is a sub book to the cash book. From the name “Petty” which means small, the Petty Cash Book is used to record cash transactions with a small amount and that occurs frequently.

READ ON  Key Errors that don't affect trial balance: Error of Commission

General Journal

General Journals or Journal proper or simply Journals are used to record transactions that cannot fit in any other subsidiary books.

It can also be defined as a subsidiary book that records daily business transactions (cash or credit) in a summarized format chronological order (that is as they occur).

From the next article, I will elaborate on each of the subsidiary books. I will also explain how Microsoft Excel can be used to record subsidiary books.