Meaning and Need for Subsidiary Books

Every business enters into a very large number of transactions of a similar kind — hundreds of credit purchases, hundreds of credit sales, dozens of bills accepted and received, and so on. If every single one of these were entered in one common Journal, that Journal would become unmanageably long, posting to the ledger would be slow and error-prone, and no one person could be made responsible for any one class of transaction. The Maharashtra HSC (MSBSHSE) Book-Keeping and Accountancy syllabus addresses this exactly the way real businesses do: by sub-dividing the Journal into a number of Subsidiary Books (also called Special Journals or Books of Original Entry), each meant to record only ONE particular class of recurring transaction.

Subsidiary books are still books of original entry — a transaction is recorded here for the first time, exactly as the Journal would otherwise have done — but each book specialises in one type of transaction, and postings to the ledger are made periodically from totals wherever that is possible, rather than transaction by transaction.

Types of Subsidiary Books

Why sub-divide the Journal? (Advantages of Subsidiary Books)

• Division of labour — a different member of staff can be made responsible for each subsidiary book, so the same person is not writing up every kind of transaction.
• Specialisation and efficiency — a clerk who writes up only the Purchase Book, for instance, becomes faster and more accurate at that one job.
• Saving of time — postings to the ledger can be made periodically from period TOTALS (e.g. once a week or once a month for the Purchase Book) instead of transaction by transaction, which sharply reduces the number of ledger postings.
• Easy checking and control — since transactions of one kind are grouped together, cross-checking a supplier's account, a customer's account, or the total goods purchased/sold in a period becomes much easier.
• Prompt and complete information — the total of a given subsidiary book at any time gives an instant, running figure (e.g. total credit purchases so far this month) without having to search through a mixed Journal.
• Reduced chance of errors and fraud — with different persons handling different books, and each book internally self-totalling, mistakes and irregularities are easier to detect.

Whatever the book, the basic principle carried forward from the Journal never changes: every transaction recorded in a subsidiary book is still, eventually, posted to the ledger following the normal rules of debit and credit under the Double Entry System — the topic covered in the previous chapter of this Std XI syllabus.