Chapter: Recording of Transactions - II

• Introduction & Meaning

  • Definition of Special Purpose Books (Subsidiary Books)
  • Need for Subsidiary Books (Division of labor, detailed information)
  • Types of Subsidiary Books

• Cash Book

  • Single Column Cash Book
    • Records only cash transactions
    • Format: Date, Particulars, L.F., Amount (Receipts & Payments)
  • Double Column Cash Book
    • Cash and Bank columns
    • Recording of Contra Entries (transfers between cash and bank)
  • Triple Column Cash Book
    • Cash, Bank, and Discount columns
    • Treatment of Discount Allowed and Discount Received
  • Petty Cash Book
    • Maintained for small expenses
    • Uses Imprest System
    • Main Petty Cashier vs. Petty Cashier

• Purchase Book (Purchase Day Book)

  • Records only credit purchases of goods (dealings in which the firm trades)
  • Entries based on Invoices received
  • Excludes cash purchases and purchase of assets

• Sales Book (Sales Day Book)

  • Records only credit sales of goods
  • Entries based on Invoices sent to customers
  • Excludes cash sales and sale of assets

• Purchase Return Book (Return Outward)

  • Records goods returned to suppliers
  • Prepared on the basis of Debit Notes issued

• Sales Return Book (Return Inward)

  • Records goods returned by customers
  • Prepared on the basis of Credit Notes received

• Journal Proper (General Journal)

  • Residual book for transactions not fitting other books
  • Key Uses:
    • Opening Entries
    • Closing Entries
    • Rectification of Errors
    • Transfer Entries
    • Adjustment Entries
    • Credit purchase/sale of assets

• Ledger Posting from Subsidiary Books

  • Posting from Cash Book
    • Cash/Bank accounts bypassed; contra entries handled specifically
  • Posting from Purchase Book
    • Individual suppliers credited; Total purchases debited
  • Posting from Sales Book
    • Individual customers debited; Total sales credited
  • Posting from Return Books
    • Purchase Return: Suppliers debited; Return Outward credited
    • Sales Return: Return Inward debited; Customers credited