Types of subsidiary books are one of the most important topics in accounting for CBSE students. Books of original entry or subsidiary books are used in accounting. These subsidiary books are required to systematically record day-to-day business transactions in the accounting process. These books help in categorizing different types of transactions, thereby making it simpler for businesses to maintain detailed and accurate financial records. This article will define subsidiary books, the types of books used in the accounting system of India, the format followed as per the guidelines of CBSE, and the importance of books in managing finance.
Definition of Subsidiary Books
Subsidiary books are the primary accounting books wherein a specific type of entry initially takes place before posting the data in the ledger. These books are therefore crucial for the Indian CBSE curriculum because they ease the accounting process for organizing multiple transactions. The subsidiary books are classified depending on the nature of the transaction, either cash, sales, or purchase, and that reduces bookkeeping together with the errors that may occur.
Key Aspects of Subsidiary Books
- Books of Original Entry
- Subsidiary books are called books of original entry because here the financial transactions are first recorded.
- All transactions are recorded in these books before transferring the data into the general ledger and, thus, it keeps accounts tidy and updated.
- Categorization of Transactions
- These texts classify financial transactions into various categories such as cash, credit, or purchases, among others. Such classifications will ease proper record-keeping.
- It helps businesses and accountants quickly identify the nature of the transaction, thereby helping in getting accurate financial reporting.
- Error Minimization
- Through subsidiary books, the chances of error that may be incurred by direct posting into the general ledger are reduced.
- Detailed transaction records will easily help show any discrepancies so that adjustments can be made in the right time.
Types of Subsidiary Books
Such books or subsidiary ledgers also have varying forms, which are mostly used in Indian accounting. Different books and their purposes must be known to ensure that records are kept accurately and proper, not only during examination but also in practice.
Purchases Book
The Purchases Book is utilized for recording all credit purchases of goods or raw materials intended to either be used in production or resold. The companies do not make any kind of record of cash purchases since cash purchases are made independently in a cash book. The Purchases Book is very important for the account payable of a business as it helps track, or account for what is owing to the suppliers. Entries in this book are made based on the invoices received from suppliers, so that all credit transactions are systematically documented.
| Date | Particulars | Invoice No. | L.F. | Amount (₹) |
Sales Book
All the credit sales transactions entered by the business will be recorded in the Sales Book, also termed as Sales Day Book. Since the same is not done for cash sales which are rather noted in the Cash Book, the cash sales transactions are not found in this book. This book is very crucial to handle accounts receivables since these help a business account for how much it expects to collect from its customers. The entries are based on the sales invoices issued to customers that prove sales on credit.
| Date | Particulars | Invoice No. | L.F. | Amount (₹) |
Cash Book
A cash book has characteristics of both the journal and the ledger. The record of all cash and bank transactions in the accounting record takes place including cash receipts and cash payments on one side and corresponding entries in the bank, with deposits, in a structured format. So, updating it daily provides real-time views of the cash flow inside a business; therefore, the cash book is a must for the monitoring of liquidity.
| Date | Particulars | L.F. | Cash | Bank | Date | Particulars | L.F | Cash | Bank |
Journal Proper
In this regard, the Journal Proper accounts for entries that fall into no other special subsidiary books. Among those are adjustment entries, opening entries, closing entries, and rectifications of errors. Why is it important? It is because recording unusual or unique transactions outside the ordinary financial operations may be done with the help of the Journal Proper.
| Date | Particulars | L.F. | Debit | Credit |
Returns Inward Book (Sales Return)
Sales Return Book, also called Return Inward Book, is maintained to record all returns from the customers. When a customer returns the goods returned under a defective lot, different speciation, or does not like the product, this book captures all the transactions. This way, a business can keep its inventory adjustment and proper customer return or replacement handling in order.
| Date | Particulars | Outward invoice | L.F. | Details | Amount |
Returns Outward Book ( Purchase Return)
The Returns Outward Book or Purchases Return Book contains goods returned back to suppliers. When a business returns purchased goods for defects, discrepancies in quantities, or other reasons, such transactions are recorded into this book. The Returns Outward Book ensures that liabilities to suppliers show up accurately.
| Date | Particulars | Debit invoice | L.F. | Details | Amount |
Significance of Subsidiary Books
Subsidiary books are more than just bookkeeping since they have much import. These books are important for CBSE students as they form the backbone of accounting and financial management.
Organized Financial Data
- Subsidiary books help businesses and students manage their financial data systematically by categorizing different types of transactions.
- Organized data helps in generating accurate financial statements, aiding decision-making processes.
Error Detection
- Using subsidiary books makes it easier to detect and rectify errors in entries before they are posted to the ledger.
- It allows for a clear audit trail, reducing the time spent on finding and fixing mistakes in financial records.
Facilitates Audits & Verifications
- Subsidiary books provide a comprehensive record of transactions, which simplifies the audit process.
- Auditors can easily verify the financial accuracy by checking these detailed transaction records.
Time-Saving
- By separating transactions into specific categories, these books save time for accountants and bookkeepers in data entry and analysis.
- This systematic approach speeds up the process of preparing financial reports and statements.
Conclusion
Understanding the types of subsidiary books is fundamental to CBSE students who are studying commerce and accounting. These books help keep organized and accurate financial record-keeping, support efficient bookkeeping practices, and show transparency in the accounting process. This goes beyond the importance of passing exams and also lays down a proper base for more advanced accounting concepts. Proper application of subsidiary books helps a business reduce complexity in financial management, and this helps in students’ practical knowledge of accounting principles.
Types of Subsidiary Books FAQs
What are subsidiary books in accounting according to CBSE?
Subsidiary books are special accounting books that are used for recording specific transactions like purchases and sales as well as cash entries before reporting the same in the ledger.
What are the different types of subsidiary book, accounting?
The main types are: Purchases Book Sales Book Cash Book Journal Proper Returns Inward Book Returns Outward Books.
Why are subsidiary books essential to the students of CBSE?
Subsidiary books are required as they provide an account of the grounds for accounting principles. Thus, they excellently lay the foundation for advanced studies in commerce.
What is a subsidiary book and ledger?
Subsidiary books record the transactions in totality, while the ledger combines all these entries to form financial statements.
In what ways do subsidiary books help to detect errors?
The subsidiary books ensure that the main ledger is correct by making sure accurate records of each transaction are kept so that mistakes can be noticed and rectified before these mistakes become part of the ledger.
