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What do you understand by the subsidiary book?
Subsidiary book or the day book is an important area of Accountancy. It is a type of journal that maintains the accounts of detail transactions of a similar type. The entries in the subsidiary book are known as the original entries or the primary entries.
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What is the importance of subsidiary books and journals:
For every day or every week or every month’s transactions, we use the journal. But this is really haphazard for large scale business. So, to make the entries simpler and easy to understand Subsidiary books or the Day books are important.
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7 types of Subsidiary Books:
A subsidiary book records both the cash and non-cash transactions. Under the non-cash transaction, we can divide the subsidiary books into7 categories like—
Purchase Book or Purchase Journal:
The purchased book is the book of original entry where the credit purchase of goods is recorded. The cash purchase of goods is recorded in the cash book. When the other assets are purchased on credit, it will not be recorded in the purchase book; it will be recorded in the journal proper.
- Sales book or sales journal:
This is a book of original entry where goods sold on credit are recorded. But in case of cash sales, it is recorded in the cash book. When other assets are sold for credits they are not recorded in the sales book; they are recorded in the journal proper.
- Purchase return book or purchase return journal:
The transaction from the return of purchases of goods is recorded in the Purchase Return Book. This is the book of original entry. Goods may return for several reasons like-
- When any defect in the goods is found.
- When goods are not matched with the sample copy.
- If the goods supplied is more than the requirements.
- Sales return books or sales return Journal:
Transactions from the return of sales of the goods are recorded in sales return books. It does not record any return of goods which are sold on cash.
- Bill receivable book:
In case of credit sale, the seller draws a bill to the debtor, and when the bill is accepted from the debtor, it becomes the bill of exchange.
- Bills Payable Book:
In case of credit purchases, the business enterprise accepts the bill of exchange, and it is then known as the bills payable. The bills due for payments should be kept under close watch, and for this purpose, a separate book is kept which is known as Bills payable book.
- Journal proper or the general journal:
Cash transactions are recorded in the cash book, and non-cash transactions are recorded in the purchase book; sales return, sales book, bills receivable book and the bills payable books.
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