Subsidiary Books

Subsidiary books record comparable transactions. These are original entry books that record similar or repeating transactions in chronological order. They are used instead of Journal to record similar or repetitive transactions.

There are different types of subsidiary books that are used on day to day accounting basis. These books are mentioned below as follows:

• Cashbook: These are the type of books that record all the transactions relating to cash and bank
• Non-cash payments are not mentioned in this book
• Cash books have similar functionalities compared to a ledger and hence act as a subsidiary books

• Bills receivable: These are the types of books that record the credit bill transactions that happen i.e bills that cause an inflow of cash 
• Bills payable: These are the types of books that record the debit bills transactions i.e bills that cause an outflow of cash
• Sales book: Sales book is the type of subsidiary book that records all the transactions relating to goods sold on credit
• Any other type of transaction is excluded
• Purchase book: Purchase book is a type of book that records all the credit purchases and all other types of transactions are excluded

There are a few more types of subsidiary books that are available to do the accounting but these few would be enough to set an example of what the subsidiary book means and what are its purposes.

Subsidiary Books Format

It is important to remember that companies are not limited to one book. It is also possible to be a sole trader and use your own software.

Having said that, subsidiary books are an interesting area of accounting. Companies can get very detailed financial statements out of them. They are also very useful for planning and investment management.

In this way they are very similar to our accounts themselves: even a family run business with no shareholders can follow the same rules. If they had shareholders then accounts would be used to record their assets and liabilities and pay them out on their behalf. And if it were a public company then the subsidiary books would probably be used by all public companies in similar ways. In fact, in private companies, there may well be some variations.

Why Subsidiary Books?

The amount of time lost to copy typing and other derivatives of illegible handwriting, then being stuck with a pile of paper which could be shredded at any time.

That’s when “subsidiary books” come into play. Subsidiary books are books that accountants use to keep track of their work and business accounts in one place and it was a much simpler thing before the invention of computers.

The main reason for this is that they reduce the amount of paper used by accountants by providing multiple views into their data: not only can it be looked at from different angles (i.e., own records), other people can also look at other parties’ books from different angles (i.e., it can be checked whether other people seem to be doing well). This is particularly valuable when dealing with large volumes of material, such as corporate balance sheets, which need detailed review because there can easily be errors there if someone else has reviewed them, then the said person will have done so without telling or mentioning the changes made to the books.

Conclusion

The purpose of this article is to point out some of the main advantages (subsidiary books) which help in maintaining proper accounting books for the betterment of the organisation. Subsidiary books help in categorising different heads into different categories where they belong, this makes it easier to identify the transactions and do accounts properly.