Subsidiary Books
Types and control
Subsidiary books divide the journal by transaction type: cash book, petty cash book, purchases book, sales book, purchase return book, sales return book, bills receivable book, bills payable book and journal proper. They save time, allow division of work and provide control. The cash book is both a journal and a ledger account. A simple cash book has one cash column; a two-column book adds bank; a three-column book adds discount. Contra entries arise when cash is deposited into or withdrawn from bank and are marked “C”.
Worked example
A petty cashier receives an imprest of ₹2,000. He pays postage ₹250, stationery ₹400 and cleaning ₹150. Total payments are ₹800, so cash remaining is ₹1,200. To restore the imprest, the main cashier reimburses ₹800. The petty cash book records the payments analytically; the reimbursement entry is Petty Cash A/c Dr ₹800 and Cash A/c Cr ₹800. Reasoning: the imprest system fixes the float, and only actual expenses are reimbursed.
Traps that cost marks
Credit sales go to the sales book, not the cash book. Credit purchases go to the purchases book. Trade discount is not recorded in the books; cash discount is recorded in the cash book or discount column. Contra entries must not be posted to the ledger twice. Do not use the petty cash book for large payments. Returns are recorded in separate return books, not in the sales or purchases book.