Maharashtra Board Class 11 Book Keeping and Accountancy Chapter 5 Subsidiary Books PDF Download

Subsidiary-Books

Introduction

A small business may be able to record all transactions in single Journal but as the business expands the number of transactions becomes so large, that the Journal is required to be sub-divided into Special Journals which are called Subsidiary Books.

Meaning: The sub division of Journal on the basis of nature of transaction is known as Subsidiary Books. These books are also called as Books of Original entries or Prime entries because the transactions are first recorded in Subsidiary Books and then posted in the Ledger.

Need for maintaining Subsidiary Books:

1) Specialisation: When the staff is appointed for same type of work it leads to specialisation and increase in efficiency.

2) Time saving and economical: Different accounting procedures can be taken up at the same time. This will save time and prove to be economical.

3) Division of work: The writing of Subsidiary Books can be conveniently divided among different clerks. Hence it is easy to keep the Books upto date.

4) Quick information and future reference: Subsidiary Books gives quick information relating to the accounts and makes future reference easy.

5) Internal check: Verification of correctness can be made more effectively.

Teacher's Note

Subsidiary Books help businesses keep accounts organized. For example, a small shop in India uses a Cash Book to track daily money coming in and going out.

Exam Trick

Remember: Subsidiary Books = Special Journals. Just like Aadhaar divides your information into sections, Subsidiary Books divide Journal into special sections by transaction type.

Points to Remember

Subsidiary Books divide the Journal based on the type of transaction.
They are also called Books of Original Entries or Prime Entries.
Specialization increases when staff works on same type of transactions.
Subsidiary Books save time and make work easier.
They help in giving quick information about accounts.

Types of Subsidiary Books on the basis of transaction

Subsidiary Books are divided into four main types based on transactions:

Cash/Bank Transactions: These include Single column Cash Book, Bank Book, and Two column Cash Book.

Credit Transactions: These include Purchase Book, Sales Book, Purchase Return Book, and Sales Return Book.

Bill Transactions: These include Bills Receivable Book and Bills Payable Book.

Others: These include Journal Proper and Petty Cash Book.

Following are the important Subsidiary Books:

1) Cash Book.
2) Petty Cash Book.
3) Purchase Book.
4) Purchase Return Books (Return Outward Book).
5) Sales Book.
6) Sales Return Book (Return Inward Book).
7) Journal Proper.

Cash Book

All Cash and Bank transactions are recorded in the Cash Book. The Cash Book has two sides where the left hand side is Receipt Side (Debit-side) and the right hand side is Payment Side (Credit side). When amount is received details are recorded on the Receipt side and when payments are made details are recorded on the Payment side. Cash Book a Journal since it is a Book of Original entries and it also a ledger since it constitutes a classified record of all cash transactions in the form of Ledger and helps in finding out Cash and Bank balance at the end of particular accounting period. Thus, it can be said that cash book serves dual purpose of journal as well as ledger.

Teacher's Note

A Cash Book records all money received and paid. Like your piggy bank account book that shows money in and money out each day.

Exam Trick

Remember: Cash Book = part Journal + part Ledger. It records transactions AND shows balances, making it special.

Points to Remember

Cash Book records all cash and bank transactions.
It has two sides: Receipt Side (debit) and Payment Side (credit).
Cash Book works as both a Journal and a Ledger.
It helps find the final cash and bank balance.
Money received goes on Receipt side, money paid goes on Payment side.

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