Top 7 Types of Subsidiary Books

WED APR 13, 2022

You may find accounting to be a time-consuming activity. It is extremely inconvenient for organizations that have a large number of financial transactions in a year to journalize them all.

So, how do companies go about accounting in a simplified manner?

Corporations establish subsidiary books in which transactions of a similar kind are recorded in chronological order. It does not stop there. There are many types of subsidiary books to comprehend.

Do not stress! This article has you covered on the top 7 subsidiary books you need to know all about.


What are Subsidiary Books?

Subsidiary Books are books that keep track of transactions that are similar in an orderly fashion. They're also referred to as special journals or daybooks.

It is difficult in large enterprises to record all transactions in one journal and publish them to numerous accounts. As a result, the journal is divided into multiple subsidiary volumes to facilitate the easy and correct recording of all transactions.

There is a separate book for each sort of transaction.

What are the Benefits of Subsidiary Books?

The key benefits of a subsidiary book:

Appropriate with a Systematic Record of Business Transactions

Business transactions are appropriately categorized and divided into cash and non-cash transactions, which are further classed as credit purchases, credit sales, and refunds, among other things.

Individual transactions are facilitated by the books since they may be correctly and consistently documented in the subsidiary books.

Possibility of Posting

Transactions of this type are recorded in a single location, in one of the auxiliary books.

All credit purchases of items, for example, are documented in the purchases book, but all credit sales of goods are recorded in the sales book.


The task is split here, which provides the benefit of specialism. When a person performs the same task frequently and continuously, he or she gets proficient at managing it.

Beneficial in Making Decisions

Subsidiary books give detailed information about each sort of transaction individually. As a result, management may utilize the information to make decisions about future activities.

Errors and Fraud are Avoided

Internal checks become more effective since work may now be split in such a way that the work of one person is automatically verified by another.

With this internal check, the chance of mistakes or fraud occurring can be eliminated or, at the very least, reduced.

Access to Required Information

Since the transactions are only recorded in one journal, it is difficult to find information on a specific item.

When subsidiary books are kept, it is simple to acquire information about a certain type of transaction from the subsidiary books. The upkeep of these auxiliary books aids in collecting the required information at a glance.

The Top 7 Types of Subsidiary Books

There are several types of subsidiary books that are used to record various types of transactions. So, what exactly are the different types of subsidiary books?

We've listed the top seven types of subsidiary books that you need to be familiar with.

1. The Cash Book

It is recommended that cash transactions be documented as soon as possible to avoid mistakes, omissions, or fraud. This may also assist the trader in determining the cash position in real-time.

As a result, it is more convenient to record monetary transactions in a separate book known as the cash book before passing the entries through the journal. As a result, the cash book is both a book of original entry and a ledger account where all cash transactions are recorded as they occur.

The cash book is the first and most significant subsidiary book. It keeps track of all transactions involving cash and bank receipts and payments. An organization's cash books are classified into three sorts. They are as follows:

A single column cash book functions similarly to a ledger account. It has both a debit and a credit side. All cash receipts are recorded on the debit side of the cash book, and all cash payments are entered on the credit side.

Single Column Cash Book Format:

Cash Book (Single Column)
Dr.                                                                                                                                      Cr.


A Double Column Cash Book is the same as a Single Column Cash Book, with the exception that an extra column of discount is added on both the debit and credit sides of the cash book.

It tracks discounts authorized on the debit side of the cash book and discounts obtained on the credit side.

The format for a two-column cash book is shown below.

Cash Book (Double Column)
Date Particulars L.F.Discount AllowedCashDateParticularsL.F.Discount ReceivedCash

2. The Purchase Book

The purchased book can only be used to record credit-only transactions. If any asset other than products is acquired on credit, it should not be recorded in this book.

Likewise, monetary purchases are not documented in this book. Thus, before a commercial transaction is put into the purchasing book, it must meet the following pair of conditions:

· Credit purchases that do not require immediate cash payment.

· The products, goods, or commodities acquired are those that are meant for sale rather than as business property or asset.

The Purchase Book is a sub-book that is used to record all credit-purchase transactions. The asset's acquisitions are never recorded in the purchase book.

Purchase Book Format:

Purchase Book
ParticularsInward Invoice No.L.F.Amount

3. The Sales Book

The sales book, often known as the sales day book, is written in the same manner as the purchases book. It is solely used to document the sale of items on credit. As a result, before a sale is recorded in this book, the following two conditions must be considered:

· The transaction is a credit-only sale with no immediate cash payment.

· The sale is of the items with which the business firm is involved.

The Sales Book keeps track of all credit sales transactions. The sale of assets cannot be recorded in the sales book. The format for a sales book is shown below:

Sales Book
Date Particulars Outward Invoice No.L.F.Amount

4. The Purchase Return Book

The purchased returns book (also known as the Bought Returns Book or Returns Outwards Book) keeps track of the products returned to suppliers by the firm.

The buy returns book features the same columns as the purchases book: date, particulars, debit note number (as opposed to invoice number in the purchases book), ledger folio, and amount. The purchased returns book (also known as the Bought Returns Book or Returns Outwards Book) keeps track of the products returned to suppliers by the firm.

The buy returns book features the same columns as the purchases book: date, particulars, debit note number (as opposed to invoice number in the purchases book), ledger folio, and amount.

What is a debit note?

A debit note is a statement that is delivered to the individual to whom things are returned. This report notifies him that his account has been debited in the amount of the returned products.
It contains information such as the name of the person to whom the items are returned, the amount debited for the products returned, and the grounds for the return of the goods.
The entry in the purchases returns book or returns outward book is created based on the debit note.

What is a credit note?

When buyers return the merchandise together with the debit note, the seller acknowledges the transaction with a document known as the credit note.
The purchase return book, also known as the return outward book, is used to record all returns to the supplier. Every return is issued a debit note, which is noted in the Purchase Return Book.
Purchase Return Book Format:

Purchase Return Book
DateParticularsDebit Note No.

5. The Sales Return Book

The sales returns book (or Returns Inward Book) can be used to record the products returned to the firm by consumers because they were not as ordered or were defective, damaged, or otherwise unsatisfactory.

The columns in this book are similar to those in the Sales Day Book, except that instead of Invoice No., the Credit Note Number is noted.

The trader issues a credit note in duplicate to signify that the sums mentioned on the note have been credited to the customer's account. These credit notes are used to make the entries in the sales returns book.

The sales return book keeps track of all transactions including inbound returns. It is sometimes referred to as a return inward book.

When a consumer returns products, a credit note is provided to the customer and documented in the Sales Return Book.

Format of Sales Return Book:

Sales Return Book
Date ParticularsCredit Note No.

6. The Bills Receivable Book

This book can be used to record the information of invoices receivable on which the company will receive payments from third parties in the future. The acceptor's (debtor's) name, terms, due date, amount, and other data must all be recorded in this book.

The Bills Receivable Book tracks all transactions involving bills drawn in the company's favor.

The sum of the bills receivable book is deposited to the Bills Receivable account's debit side. The Bills Receivable Book Format is as follows:

Bills Receivable Book
Date of Bill Bill No.AcceptorFromTermsDue DateAmount

7. The Bills Payable Book

This is also an original entry book and is used to document the specifics of all the 'bills payable' acquired by the firm to pay the sums owed by it (the organization or the trader) to its creditors at a later period.The records to be made in this book concern the drawer's name, the payee's name, the term, the due date, and other details. After then, the acknowledgment is returned to the drawer.

The Bills Payable Book keeps track of all transactions of bills drawn on the firm and payable by the business. The format of the Bills Payable Books is as follows:

Bills Payable Book
DateBill No.DraweePayeeTermsDate Of MaturityAmount


What Do You Mean By Books of Original Entry?

Books of original entry are accounting books or journals in which all transactions are first or initially documented.

The commercial transactions are solved in great detail, and their descriptions are the first to be documented in this original entry book.

The accounting journals in which business transactions are normally documented are referred to as books of initial entry. The data in these books is eventually aggregated and entered into a general ledger, from which financial statements are generated.

What is the Full Form of L.F?

The letter LF stands for ledger folio number. Folios are traditionally used for reference or to split books into sections. The number of pages of a book or paper may also be referred to by this phrase.

In accounting, a folio serves a similar purpose. It is used to signify entries in financial diaries and ledgers. An LF represents the page number of an entry in your company's ledger.

Summing Up

When there are few business transactions, there is just one journal in which all business transactions are documented. However, if the firm is huge and there are a high number of transactions, you will want subsidy books.

If you found this article beneficial, please leave a comment and don't forget to share it with others who may need it. You are aware that sharing knowledge entails gaining knowledge!

If you believe we have overlooked something, please let us know in the comments area below.

Letstute (Universal Learning Aid Pvt. Ltd.) is an E-learning company based in Mumbai, India.


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