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Short Answer Questions · Q6

Q.Define the purpose of maintaining subsidiary journal.

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A subsidiary journal is a separate book of original entry for one class of transactions. It is maintained to break the single journal into manageable specialised books so that a large number of similar transactions can be recorded efficiently.

Purpose. When transactions are few, one journal suffices. But in a growing business the number of transactions becomes large, and recording each one in a single journal is slow and unwieldy. Therefore the journal is sub-divided into several subsidiary journals, each recording only one type of transaction. The key purposes are:

  • Division of work — different clerks can handle different books simultaneously.
  • Specialisation and efficiency — a clerk handling one book becomes quick and accurate.
  • Speed — repetitive transactions are recorded without a fresh narration each time.
  • Easy reference and checking — all transactions of one kind are found in one place, making errors easier to locate.
  • Saving of the accountant's time — routine records are delegated, leaving the accountant free for important work.
Subsidiary journalClass of transaction recorded
Cash bookCash and bank receipts and payments
Purchases bookCredit purchases of goods

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