SBS111111111222222222111111111111111.ppt

pfa

1. Subsidiary books
Subsidiary books of prime entry or original
entry are those books where business
transaction are recorded in the books in the
first instance and then posted in the ledger
from these books.

2. Classification of subsidiary books
1 Cash Book -> (to record receipt and
payment of cash)
2Purchase Book -> (to record all credit
purchases)
3Sales Book -> (to record all credit
sales)
4Purchase Return Book -> (to record return
outwards)
5Sales Return Book -> (to record return
inward)

3. 6Bills Receivable Book -> (to record all bills
received from customer)
7Bills payable Book -> (to record all
acceptance made by the firm)
8Journal Proper -> (to record all transactions
which could not be recorded in any of the above
subsidiary)

4. Advantages of subsidiary books
1.Economy in labour.
2.More accuracy.
3.Availability of additional information.
4.Maintenance of specialised accounts.
5.Division of work.
6.Increases efficiency.
7.Helps to locate the errors.

5. Limitations
1. Not needed for small concerns.
2. There are chances to commit mistakes.
3. It is expensive.

6. Cash book
Cash book is maintained to record the
transactions, relating to the receipt and payment
of cash.
Kinds of cash book
1)Simple cash book
2)Two column cash book
3)Three column cash book
4)Multi columnar cash book

7. Simple cash book
DateParticulars
(receipts)
R
N
L
F
Amo
unt
DateParticulars
(payments)
V
N
L
F
Amou
nt
Dr
Cr

8. Double column cash book
DateParticulars
(receipts)
R
N
L
F
disco
unt
cashDateParticulars
(payments)
V
N
L
F
discou
nt
cash
Dr
Cr

9. Points to be borne in mind while
preparing two column cash book
Che`que, bank draft received should be treated
as cash received unless, it is deposited into the
bank on the same day.
If Cheque, bank draft received and it is deposited
into the bank on the same day the transaction
should be split in two transactions namely
1 receipt of cash on some account
2 deposit cash into bank.

10. Similar is the treatment even when somebody
directly deposit cash or cheque into bank.
If a cheque which was received on a previous
date, is deposited into bank , it should be treated
as cash deposited into bank. so an entry had to
be made on the credit side of the cash book
If any payment is made by cheque, it should be
assumed that payment is made in cash by
withdrawing cash from the bank. Thus when
payment is made by cheque,
A-Make an entry for withdrawing cash from bank
for the office.

11. B-Make an entry for paying cash.
Similar shall be the accounting treatment if cash is
withdrawn from the bank for personal use.
Bank charges debited by the banker should
assumed cash is withdrawn from the bank and
the same is paid to the bank.
When the bank makes payment on our behalf ,it
should be assumed that cash is withdrawn from
the bank and payment is made.
When interest is credited by the bank on our
deposits, the transaction is split in to two

12. A- receiving cash for bank interest.
B-depositing cash into bank.
If crossed cheque is received from someone, it
should be assumed that it is deposited into the
bank on the same day
Cheque received should be treated as uncrossed
cheques unless otherwise stated.
If a cheque issued by us is dishonoured,it is
entered as
A-cancellation of withdrawal of cash from the
bank.
B-cancellation of payment of cash.

13. When cheque deposited by us is dishonoured
two entries should be made
A-for cancelling the receipt of cash
B-cancelling the deposit of cash

14. Three column cash book
DateParticulars
(receipts)
R
N
L
F
disc
ount
cashbankDateParticulars
(payments)
V
N
L
F
disco
unt
cashBank
Dr
Cr

15. Points to be borne in mind while
preparing three column cash book
1)Amount brought as capital
Cash column—if introduced in cash
Bank column– if deposited in bank
2) Opening balance should be written as ‘To balance b/d and
Bank overdraft should be entered in the bank column as
‘By balance b/d.
3)Cash paid into bank and cash withdrawn from the bank
should be entered as contra entries
Contra entry is one which appears on both side of the cash
book and letter ‘C’ should be written in the LF column
on each side of the cash book

16. Entry for deposit
Bank a/c ----Dr
To cash a/c
Entry for withdrawal
Cash a/c -----Dr
To Bank a/c
4) Receipt of cheque
Cheque received and not deposited should be debited in
cash book
Later when cheque sent for collection, contra entry will
be recorded in the cash book
Cheque received and immediately deposited in to bank
should be debited in the bank column

17. 5) Payment by cheque should be credited in the
bank column of cash book
6)Dishonoured cheque should be credited in the
bank column to cancel the previous debit given
to the bank column when cheque was deposited.
7 )Bank charges and payments made by the bank
on behalf of the customer should be entered in
the bank column on the credit side of the cash
book.

18. Petty cash book
The word ‘petty’ is derived from the French word
petit which means small. It is subsidiary cash
book where all very small expenses of frequent
nature are recorded It is used for recording
small payments like postage & telegram, printing
& stationary, cartage and carriage, travelling
expenses etc.

19. Advantages
It is simple and does not require sound
knowledge of accounting.
Chief cashier job will be simplified.
Number of entries will be reduced in main cash
book
It will saves time and space.

20. Types of petty cash
Simple petty cash book
Analytical petty cash book
Imprest system of petty cash book

21. Simple petty cash book
Amount
receive
d
C
B
F
Dateparticulars V.noL.F Amount

22. Analytical petty cash book
Amount
received
C
B
F
date particulars V
N
Total
amount
Analysis of payments
Cartag
e &
coolie
Travel
ling
exp
Postag
e &
telegra
m
Printing &
stationery
wages Sundry
exp
LF
no
Led
ger
A/c

23. Purchase book
This book is used for recording all the transactions
of credit purchase only. This book is also known
as Inward Invoice or purchase journal.

24. Structure of Purchase book
Date Particulars Invoic
e no
L.F.Details Amount

25. Purchase return book
Purchase returns are recorded in the purchase
return book. For every return, a debit note is
prepared and sent to the supplier for making
necessary entries in his book.
Debit note
When goods are returned to the supplier, a
statement called ‘debit note’ is sent along with
goods. It is an information to the supplier that his
account is being debited with the value of goods
returned to him

26. Structure of Purchase return book
Date Particulars Debit note
no
L.
F.
Amount

27. Sales book
Sales book is used to record the transactions of
credit sales. This book is also known as sales
journal or outward invoice book.

28. Structure of sales book
Date Particulars Invoice
no
L.F.Details Amount

29. Sales return book
This book is used to record sales returns or the
goods returned by the customers.
Credit note.
When goods are received back from a customer, a
credit note is prepared in the name of customer.
It is acknowledgement of return, intimating the
customer that his account is credited for the
goods returned by him.

30. Structure of sales return book
Date Particulars Credit note
no
L.
F.
Amount

31. Bills receivable book
S/noDate Name of
acceptor
s
Date
of
bills
Tenno
r
Date of
maturit
y
Where
payabl
e
L
.
F
Amoun
t

32. Bills payable book
S/nodat
e
Name of
drawer
Date
of
bills
Tennor Date of
maturit
y
Where
payabl
e
L.
F
Amou
nt