What are Subsidiary Books?

Recording transactions is significant not only to ensure accuracy but also to bring efficiency. Subsidiary books significantly help businesses categorize transactions based on their nature, eliminating the need to enter everything. They are a part of all scales of businesses, whether small or large. They are financial instruments that record transactions and transfer them to ledger accounting.

This blog will help the aspiring accountant understand subsidiary books' significant role. 

 

What do you mean by Subsidiary Books?

The subsidiary books fulfill the purpose of profit and loss accounts. These books organize the transactions and make bookkeeping efficient and systematic. 

For instance, all the credit purchases can be recorded in the purchase book, and all the credit sales information can be recorded in the sales book. This reduces errors and makes financial records easier to track. 

 

Types of Subsidiary Books and Their Format 

There are seven significant subsidiary books, each with a particular use. By dividing all these transactions in these books, businesses understand their accounting system and can work on improvisation for growth and expansion. 

The different types of subsidiary books are listed below:

• Purchase book
• Sales book
• Purchase returns book 
• Sales returns book 
• Cash book 
• Bills receivable book 
• Bills payable book 

 

1. Purchase book

The purchase book records all the credit purchases of goods, while the cash and fixed assets purchases are not recorded here. 

The format of a purchase book is mentioned below:

 

Date	Invoice No.	Supplier Name	Details	Amount
01-Mar-2025	209	XXX	200 bags of clips	30,000
08-Mar-2025	210	XXX	300 bags of clips	40,000

 

2. Sales Book 

The sales book records all the credit sales of goods but not cash and assets sales. 

The format of a sales book is mentioned below: 

 

Date	Invoice No.	Customer Name	Details	Amount
01-Mar-2025	209	XXX	50 clips	20,000
08-Mar-2025	210	XXX	40 clips	30,000

 

3. Purchase returns book

The Purchase returns book records goods returned to the suppliers if any defective product or excess supply is found. 

 

The format of a purchase returns book is mentioned below: 

 

Date	Debit Note No.	Supplier Name	Reason	Amount
08-Mar-2025	210	XXX	Damaged goods	30,000

 

4. Sales Returns Book 

The sales return book records goods returned by customers due to damage or extra supply.

 

The format of a sales returns book is mentioned below: 

 

Date	Credit Note No.	Customer Name	Reason	Amount
08-Mar-2025	210	XXX	Damaged goods	30,000

 

5. Cash Book 

The cash book records all the cash transactions, including cash sales, purchases, expenses, and transactions made by the bank. 

 

The different types of cash books are: 

• Single Column Cash book: Records only cash transactions 
• Double-column Cash book: Cash and bank transactions are recorded
• Triple-column Cash book: Cash, banks, and the discounts offered are recorded

 

The format of a cash book is mentioned below: 

 

Date	Particulars	Cash	Bank
08-Mar-2025	Cash sales	10,000

 

6. Bills Receivable Book

Bills receivable books record all the bills of exchange received from the customers and the amounts that are due in the future. 

 

The format of a bills receivable book is mentioned below: 

 

Date	Bill No.	Drawer	Due Date	Amount
08-Mar-2025	209	XXX	09-Apr-2025	23,000

 

7. Bills Payable Book 

The bills payable book records all the bills of exchange issued to the creditors and the amount to be paid in the future. 

 

The format of a bills payable book is mentioned below:

Date	Bill No.	Payee	Due Date	Amount
08-Mar-2025	209	XXX	09-Apr-2025	23,000

 

Significance of the Subsidiary Books 

The subsidiary books are helpful to the businesses, and they help maintain different types of transactions to track at the end of an accounting period. This gives the companies a chance to work on their profits and losses. 

The significance of the Subsidiary Books are mentioned below: 

• The subsidiary books help reduce the workload 
• Keeping separate books eliminates the chances of error. 
• Instead of recording every transaction, the totals are recorded in the ledger at the end.
• Different departments work on different books, keeping the system organized.

 

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Frequently Asked Questions (FAQs) 

Are subsidiary books and ledgers different?

Yes, they are. Subsidiary books record the daily transactions, whereas ledgers summarize all those transactions. 

What transactions are adequately recorded in the journal proper?

The journal proper records transactions that do not come in the subsidiary books, such as depreciation, opening and closing entries. 

Do subsidiary books help in business accountancy?

The subsidiary books help businesses categorize transactions based on their nature, eliminating the need to enter everything. They are a part of all scales of businesses, whether small or large.