Types of Subsidiary Books

If as a student you are given 1 book instead of 5 books covering the entire syllabus then it would be very confusing as in 1 book you will have all the subjects and you will not be able to classify the subject easily. In accounting also if all transactions are put in 1 book then it will lead to confusion and that is the reason why subsidiary books are prepared. Subsidiary book refers to those books in which transactions of particular category or group are recorded, let’s look at various types of subsidiary books –

  1. Cash Book – It is the most widely used subsidiary book used by the business firms, in cash book all cash transactions are recorded hence all the cash receipts of the company as well as cash payments made by the company will be recorded in the cash book. Cash book can be of 3 types one is simple cash book in which there is only one column that is cash column, second is two column cash book which cash column and discount column and third is three column cash book which has 3 columns that are cash, discount and bank column.
  2. Petty Cash Book – It is a part of cash book but it is made separately in order to record all petty cash expenses like postage, stationary, and normal day to day to business expenses which are of an insignificant amount.
  3. Purchase Book – In this subsidiary book transactions related to credit purchase made by the company are recorded, however one should keep in mind that credit purchase of assets purchased by the company is not recorded in the purchase book rather only credit purchase of goods meant for the business is entered in the purchase book. Hence for example if a company’s total purchase is $100000 and out of which cash purchase is worth $30000 then remaining $70000 will be recorded in the purchase book.
  4. Sales Book – In this subsidiary book all credit sales transaction are recorded, just like purchase book in sales book also only credit transaction related to goods are recorded while credit sale of assets is not recorded in the sales book. Hence, for example if company’s total sale of goods is $100000 out of which $50000 is cash sales then remaining $50000 will come in sales book.
  5. Purchase Return Book – Purchase return book as the name suggests it records all transactions related to goods returned by the company to the seller from which the company has purchased goods. So for example if the company has purchased 1000 units of soap from other company and returns 10 units of soaps due to some reason then this 10 units will be recorded in purchase return book
  6. Sales Return Book– Sales return book records all transactions which involve the return of goods by the customers to the company. So for example if the customer purchases 10 boxes of shoes and returns 1 box of shoes then the entry of this 1 box sales return will be recorded in the sales return book by the company.
  7. Bills Receivable Book – It records all the bills receivable received by the company from the customers to whom the company has made credit sales.
  8. Bills Payable Book – It records all the bills payable given by the company to the company’s from whom the company has purchased goods on credit.

As one can see from the above that subsidiary books are of many types and each one has its own significance as far as company is concerned and that is the reason why companies maintain subsidiary books so that they can classify various transactions easily, hence if company wants to see transaction pertaining to credit sales then company instead of looking at all transactions will look only in the sales book.

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