Subsidiary Books are those books of original entry in which transactions of similar nature are recorded at one place and in chronological order. 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.’
The different subsidiary books and their purpose are shown below:
- 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 credit.
- 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.
- Cash Book: for all receipts and payments of cash.
- 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.
Advantages of Subsidiary Books:
The following are the advantages of Subsidiary books or Special journal:
1. Saving of Clerical Labour:
Subsidiary books effect considerable saving of clerical labour in postings and narration. Transactions of any one class such as credit purchases, credit sales, cash transactions etc., are recorded through separate subsidiary journals and there is no need for giving narration.
For example, by recording the transactions in the Purchase Day book 50% of the labour in postings is saved. The periodical total of this book is to be debited to the Purchases a/c. Only the personal accounts of the suppliers are to be credited.
2. Division of Clerical Work:
As separate journals are used for recording the transactions of each particular type, the division of clerical labour amongst several office clerks becomes possible. This makes speedy record of day-to-day transactions practicable.
3. Minimizes Frauds:
These books make possible the introduction of internal check system under which the system of rotation of writing up books can be adopted. This helps minimizing errors and detecting frauds.
4. Facilitates Further Reference:
As transactions of similar nature are grouped together in a separate book, the further reference to any particular item is considerably facilitated.