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Subsidiary Books

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When a business becomes large and performs a large number of transactions daily, it finds the single journal book insufficient to keep a primary record of all the transaction. The task of journalizing all the transaction is troublesome and expensive. It does notprovide classified information immediately. It fails to report the total amount of credit purchases and credit sales. The practical system of primary record of the transaction is subsidiary books.

Instead of maintaining a single journal book, a large sized business maintains some journal books. The collective form of all these journal books is known as subsidiary books. They are a subdivision of Journal. They are the set of a primary book in which the transactions of the business are recorded at the first time in a classified way.

"Subsidiary books of accounts are also called books of original entry because all the transactions are recorded originally or in the first instance in this subsidiary book." - Dr. A. N. Agrawala

"Subsidiary records are also known as the book of original entry, as transactions are entered there in the first instance so that they may be subsequently transferred to their respective accounts in the ledger." - J.R. Batliboi

Importance and Advantages of Subsidiary Books

The important advantages of subsidiary books are as follows:

  • Subsidiary books facilitate smooth recording of growing number of financial transactions of a business by employing a number a number of people for the purpose.
  • Recording of financial transactions at a time in a number of books will become possible. Posting only the periodical totals of these books in real and nominal accounts minimize the recording work thus saves time.
  • A number of book-keepers can be assigned for separate books. Therefore, division of work can be introduced.
  • The division of work among the book-keepers’ results in their increasing efficiency as they have to write only a special class of financial transactions in a special journal.
  • Subsidiary books also facilitate internal check, as the work of a book-keeper may automatically be checked by another book-keeper.
  • Use of subsidiary books makes easy to obtain classified information about the different classes of financial transactions.

Limitations of Subsidiary Books

The following are the notable limitations of subsidiary books:

  • The system of sub-division of journal requires a number of books and people. Therefore, maintaining subsidiary books is expensive.
  • The system of sub-division of journal does not provide information about the records of all financial transactions on chronological order.
  • It does not provide complete information about all financial transactions.
  • It is not suitable for a business which has a few volume of financial transactions.



  • A set of books of original entries in which different classes of transactions are recorded systematically in a chronological order and when they arise is known as subsidiary books.
  • Subsidiary books facilitate smooth recording of growing number of financial transactions of a business by employing a number a number of people for the purpose.
  • Subsidiary book is not suitable for a business which has a few volume of financial transactions.
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Very Short Questions

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  • The collective form of all these journal books is known as ______.

    ledger Books


    trial balance


    subsidiary books


    journal voucher book


  • Subsidiary books are sub-division of ______.

    balance sheet


    journal


    final account


    ledger


  • Which of the following is a book of prime entry?

    Journal


    Journal Voucher


    Budget Sheet


    Ledger


  • The correct way of accounting an amount received from a credit customer is ______.

    debit cash account and credit capital account


    debit cash account and credit the individual customer's account


    debit cash account and credit sales account


    debit cash account and credit the individual customer's account


  • Which of the following statement is incorrect?

    Every payment made by the petty cashier should be supported by evidence.


    In emergency, the petty cashier may give staff loans of small amounts.


    Regularly petty cashier is reimbursed to make up his cash balance to the imprest.


    The petty cash book could be either a subsidiary book or a main book of accounts.


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