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Cheatsheet: Subsidiary Books
Overview
Subsidiary books are specialized accounting journals used to record transactions of similar nature. Instead of recording every transaction in the Journal, they help simplify, classify and speed up the accounting process. They reduce clerical work and allow division of work, making accounting more accurate and efficient.
Why Subsidiary Books?
- They replace the need for a full journal in big businesses.
- Each subsidiary book deals with one type of transaction only, ensuring accuracy.
- They help in internal control, division of work, and error reduction.
- Ledger posting becomes easier because consolidated totals are posted, not individual entries.
Types of Subsidiary books
Subsidiary books are mainly 8 types:
Purchases Book
Purpose: Records credit purchases of goods only.
Format:
Points to Remember:
- Cash purchases never enter Purchases Book.
- Non-goods items (machinery, furniture) are also excluded.
- Total posted to Purchases A/c periodically; supplier-wise amounts posted to individual creditor accounts.
Sales Book
Purpose: Records credit sales of goods only.
Format:
Important Notes:
- Cash sales are not recorded here.
- Total posted to Sales A/c; customer-wise posting to Debtors Accounts.
Purchases Return Book (Return Outward Book)
Purpose: Records goods returned to suppliers.
Format:
Debit Note Issued: A Debit Note is sent to the supplier showing why goods are returned.
Posting:
- Total → Purchases Return A/c.
- Individual amounts → supplier's account.
Sales Return Book (Return Inward Book)
Purpose: Records goods returned by customers.
Format:
Credit Note Issued: A Credit Note is issued by the business for goods received back.
Posting:
- Total → Sales Return A/c.
- Customer-wise → Debtors A/c.
Cash Book
It is both a book of original entry and a ledger because it performs two functions.
Types of Cash Book
Format: (Double Column)
Cash Book (Double Column)
Debit Side - Receipts
Credit Side - Payments
Quick Facts: Cash Book
- No closing balance on credit side for cash (cash cannot be negative).
- Contra entries occur when cash is deposited/withdrawn from bank.
- Petty Cash Book often uses Imprest System.
Bills Receivable Book
Purpose: Records all bills received from customers.
Format:
Posting:
- Total → Bills Receivable A/c.
- Individual entries → Customer accounts.
Bills Payable Book
Purpose: Records all bills accepted in favor of creditors.
Format:
Posting:
- Total → Bills Payable A/c.
- Individual entries → Supplier accounts.
Journal Proper (Miscellaneous Journal)
Journal Proper is used when entries cannot be recorded in any other subsidiary book.
Contents of Journal Proper
Difference Between Subsidiary Books & Journal
Advantages of Subsidiary Books
- Saves time
- Facilitates division of work
- Allows internal control
- Reduces clerical errors
- Simplifies ledger posting
- Ensures better accuracy
Quick Revision
- Purchases Book = Credit purchases of goods
- Sales Book = Credit sales of goods
- Debit Note = Goods returned to supplier
- Credit Note = Goods returned by customer
- Cash Book = Also a Ledger
- Journal Proper = For remaining entries
The document Cheatsheet: Subsidiary Books is a part of the CA Foundation Course Accounting for CA Foundation.
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FAQs on Cheatsheet: Subsidiary Books
| 1. What are subsidiary books? |  |
Ans. Subsidiary books are special accounting books that record specific types of financial transactions in detail, allowing for easier management and tracking of accounts. They serve as a supplement to the main ledger by categorising transactions, which enhances accuracy and efficiency in accounting.
| 2. Why are subsidiary books necessary in accounting? | |
Ans. Subsidiary books are necessary because they help organise financial transactions by type, simplifying the recording process and reducing the chances of errors. They facilitate quicker access to specific transaction data and aid in preparing financial statements by providing detailed insights into various accounts, such as purchases and sales.
| 3. What is recorded in the Purchases Book? | |
Ans. The Purchases Book is used to record all credit purchases of goods for resale. It includes details such as the date of purchase, supplier's name, invoice number, and the amount of each purchase, helping businesses keep track of their inventory and supplier relationships.
| 4. How does the Cash Book differ from other subsidiary books? | |
Ans. The Cash Book is distinct from other subsidiary books because it records all cash transactions, including cash sales, cash purchases, and cash payments or receipts. Unlike other books that may focus solely on credit transactions, the Cash Book provides a complete overview of cash flow in and out of the business.
| 5. What information is included in the Sales Return Book? | |
Ans. The Sales Return Book records all returns of goods sold on credit. It contains details such as the date of return, customer's name, invoice number, and the amount refunded. This book is crucial for managing sales returns and adjusting sales figures in the main ledger.
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Apr 20, 2026 Last updated
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