1. Introduction
Subsidiary books are an important part of bookkeeping and accounting. They provide an organized and detailed record of transactions and are used to create the financial statements of a business. The subsidiary books are an extension of the general ledger, which contains the summarized information from the subsidiary books. Subsidiary books are also referred to as “day books” because they are used to record and track daily transactions. There are several different types of subsidiary books, each with its own purpose and use. In this article, we will discuss the different types of subsidiary books, how they are used, and how they are related to the general ledger.
2. Definition of Subsidiary Books
Subsidiary books are a set of books that are used to record and track financial transactions. They are typically used to record transactions that are too small or too complex to record in the general ledger, or to provide additional detail for the general ledger. The most common types of subsidiary books include the cash book, sales book, and purchase book.
The cash book is used to record all cash receipts and payments, including those from customers and suppliers. It is used to track the cash position of the business, including the amount of cash on hand and in the bank. This information is then used to reconcile the accounts and to ensure that the business is not running out of cash.
The sales book is used to record all sales transactions, including those from customers and suppliers. It is used to track the sales of the business, including the amount of sales, the number of sales, and the type of product or service sold. This information is then used to reconcile the accounts and to ensure that the business is not losing money on sales.
The purchase book is used to record all purchases made by the business, including those from customers and suppliers. It is used to track the purchases of the business, including the amount of purchases, the number of purchases, and the type of product or service purchased. This information is then used to reconcile the accounts and to ensure that the business is not overspending.
Subsidiary books are an important part of any businessโs financial records. They provide additional detail and allow businesses to track their financial transactions in greater detail. They also provide a way to ensure that the business is not running out of cash or overspending on purchases.
3. Cash Book
Cash Book
The Cash Book is one of the most common types of subsidiary books used in accounting. It is a record of all cash transactions that have taken place within a business. This includes cash receipts, payments, and transfers. The Cash Book is an important tool for tracking and managing cash flow.
The Cash Book is divided into two parts: the Cash Receipts side and the Cash Payments side. The Cash Receipts side records all income received, such as cash sales, bank deposits, and payments from customers. The Cash Payments side records all expenses paid, such as wages, rent, and utilities.
The Cash Book provides a detailed record of all cash transactions, which can be used to prepare financial statements and to monitor the cash flow of the business. It also helps to identify any discrepancies between the cash receipts and payments.
The Cash Book is a useful tool for businesses of all sizes, as it helps to ensure that cash flow is managed properly and that all transactions are accurately recorded. In addition, it helps to identify any areas where cash is being wasted or mismanaged.
The Cash Book is an important part of the accounting process, as it provides an accurate record of all cash transactions. As such, it is important to keep it up-to-date and accurate. It should be reconciled regularly to ensure that all transactions are being recorded correctly and that the cash flow of the business is being managed properly.
4. Sales Book
The Sales Book is a subsidiary book that records all sales transactions made by a business. It is used to track the sales of goods and services and to monitor the total amount of revenue generated from those sales. Sales Books are commonly used by retailers, wholesalers, and service providers.
The Sales Book is similar to the Cash Book, but instead of recording cash transactions, it records sales transactions. It is used to track the total amount of revenue generated from the sale of goods and services. The Sales Book is usually divided into two sections: the Sales Ledger and the Sales Summary.
The Sales Ledger records all sales transactions made by the business. It includes the date of the transaction, the name of the customer, the item purchased, the quantity purchased, the price of the item, and the total amount of the sale. This information is used to track the total amount of revenue generated from the sale of goods and services.
The Sales Summary is a summary of all sales transactions made by the business. It is used to track the total amount of revenue generated from the sale of goods and services. The Sales Summary includes the total number of sales, the total amount of revenue generated from the sale of goods and services, and the total amount of discounts given.
The Sales Book is an important bookkeeping tool used by businesses to track the total amount of revenue generated from the sale of goods and services. It is used to track the total number of sales, the total amount of revenue generated from the sale of goods and services, and the total amount of discounts given. The Sales Book is an important part of the accounting process and is used to ensure that all sales transactions are properly recorded and tracked.
5. Purchase Book
A purchase book is a type of subsidiary book that is used to record all purchases made by a business. This book is used to keep track of the cost of goods purchased, the date of purchase, and the supplier from whom the goods were purchased. It is an important tool for businesses to maintain accurate records and to track their spending.
The purchase book is an important part of the accounting system. It is used to record all purchases made by a business and to provide a record of the cost of goods purchased. This book is also used to help calculate the cost of goods sold, and to help with budgeting and forecasting.
The purchase book is generally divided into two sections: the purchase journal and the purchase ledger. The purchase journal records all purchases made by the business, including the date of purchase, the supplier, and the amount paid. The purchase ledger records the cost of goods purchased and the amount owed to the supplier.
The purchase book is an important tool for businesses to keep track of their spending and to ensure accuracy in their accounting records. By recording all purchases made by the business, it helps to prevent errors in the accounting system and to ensure that all purchases are properly accounted for.
The purchase book also helps businesses to track their spending and to budget and forecast their future spending. By recording all purchases made, businesses can see how much they are spending on different items and how much they are budgeting for future purchases. This information can then be used to create budgets and to plan for future purchases.
The purchase book is an important tool for businesses to maintain accurate records and to track their spending. By recording all purchases made by the business, it helps to prevent errors in the accounting system and to ensure that all purchases are properly accounted for. It also helps businesses to track their spending and to budget and forecast their future spending.
6. Conclusion
Subsidiary books are an essential part of accounting and bookkeeping. They provide an organized and efficient way to record financial transactions and provide an accurate record of all financial activities. Subsidiary books are divided into several categories, including cash book, sales book, and purchase book. Each of these books serves a unique purpose and provides valuable information to the business. By using these books, businesses can easily track their financial activities and make informed decisions. Subsidiary books are an integral part of the accounting process and should be used to maintain accurate financial records.