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Meaning and Types of Subsidiary Books
In a business, most of the transactions generally relate to receipts and payments of cash, sale
of goods and their purchase. It is convenient to keep a separate register for each such class
of transactions one for receipt and payment of cash, one for purchase of goods and one for
sale of goods. In a big concern, recording of all transactions in one Journal and posting them
into various ledger accounts will be very difficult and involve a lot of clerical work.
This is avoided by sub-dividing the journal into various subsidiary journals or books. The
subdivisions of journal into various subsidiary journals for recording transactions of similar
nature are called as ‘Subsidiary Books.’
These journals are collectively known as “Books of prime entry”, “Books of original entry” and
“Subsidiary books”. These are called by the first two names because all transactions are first
recorded in these books. The third name indicates that these are subsidiaries of the Journal.
So, Subsidiary Books are those books of original entry in which transactions of similar nature
are recorded at one place and in chronological order.
The different subsidiary books and their purpose are shown below:
 Cash Book – for all receipts and payments of cash.
 Purchases Day Book – for recording credit purchase of goods only. Cash purchase or
assets purchased on credit are not entered in this book.
 Sales Day Book – for recording credit sales of goods only. Assets sold or cash sales
are not recorded in this book.
 Purchases Returns Book – for recording the goods returned to the suppliers when
purchased on credit.
 Sales Returns Books – for recording goods returned by the customers when sold on
 Bills Receivable Book – for recording the bills received [Bills Receivables] from
customers for credit sales.
 Bills Payables Book – for recording the acceptances [Bills Payables] given to the
suppliers for credit purchases.
 Journal Proper – for recording any transaction which could not be recorded in the
above-mentioned subsidiary books. For example, assets purchased or sold on credit
and opening entry etc., are entered in this book.
Next comes Ledger. Ledger is the prepared with the total amounts of the different subsidiary
books. for example, the total of purchase journal is posted to the debit side of purchase
account. In other words, the totals of the different ledgers will be transferred to ledger accounts
of the same name. Ledger too is known by three names: “Primary books” and “Books of
secondary entry” and “Principal books”. Ledger is known as a primary book and principal
book because it is from ledger balances that trial balance and final accounts are prepared. It
is called a secondary book because it is prepared after the journal and on the former’s basis.
Hence it is subsidiary to the journal. The balances of the ledger accounts are used in
preparation of the final accounts of the organisation.


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