Table of Contents
Subsidiary Books
- Relating to something that is added but is not essential
- Functioning in a subsidiary or supporting capacity
- supplementary
- auxiliary
- ancillary
- additional
- contributory
- secondary
Subsidiary Books used in Financial Accounting are Books which are used in place of the Journal, to enable easier and more efficient accomplishment of the tasks involved in accounting directed at achieving the objectives of accounting.
Subsidiary Books are those books of original entry in which transactions of similar nature are recorded at one place and in chronological order. In a big concern, recording of all transactions in one Journal and posting them into various ledger accounts will be very difficult and involve a lot of clerical work.
This is avoided by sub-dividing the journal into various subsidiary journals or books. The subdivisions of the journal into various subsidiary journals for recording transactions of similar nature are called as ‘Subsidiary Books.’
Need
If the size of a business is a small one, it may be possible to enter each and every traction in one book only, i.e. Journal, which is generally known as the books of original entry. But when the size of the business grows and the number of traction becomes very large, it is no, longer possible to record all transactions in one Journal the only into a number of special journals. These special journals are also known as ‘Subsidiary books’. Or the ‘Books of Original Entry ’. Thus the subsidiary books may be defined as books where the transactions are entered first and then ledger accounts are prepared on their basis.
Uses
Each subsidiary book is meant for recording all the transaction of a similar nature. For e.g. all-cash transaction may be recorded in one book, all credit purchase traction in another book and all credit sales transaction in yet another book, and so on.
Advantages of Subsidiary
The following are the advantages of Subsidiary books or Special journal:
1. Saving of Clerical Labour
Subsidiary books affect a considerable saving of clerical labour in postings and narration. Transactions of any one class such as credit purchases, credit sales, cash transactions etc., are recorded in separate subsidiary journals and there is no need for giving narration.
For example, by recording the transactions in the Purchase Daybook 50% of the labour in postings is saved. The periodical total of this book is to be debited to the Purchases a/c. Only the personal accounts of the suppliers are to be credited.
2. Division of Clerical Work
As separate journals are used for recording the transactions of each particular type, the division of clerical labour amongst several office clerks becomes possible. This makes a speedy record of day-to-day transactions practicable.
3. Minimizes Frauds
These books make possible the introduction of an internal check system under which the system of rotation of writing up books can be adopted. This helps to minimize errors and detecting frauds.
4. Facilitates Further Reference
As transactions of similar nature are grouped together in a separate book, further reference to any particular item is considerably facilitated.