What are Subsidiary Books?

C. Daw

Subsidiary books are special journals or ledgers where the first, or the original, transaction entries are made before being posted in their respective accounts. They are referred to as subsidiary books because they are separate books which categorize income and debits into their proper areas before they are added into the principle or main books. The journal entry made in the primary records acts as a source of information to be used in building specific final accounts in bookkeeping. The primary records have many names that include prime book of entry, books of original entry, primary records, and many others that depict their function.

An accounting clerk may be responsible for making primary records in the subsidiary books.
An accounting clerk may be responsible for making primary records in the subsidiary books.

The most common types of subsidiary books of accounting include a purchase book which is used to record all credit purchases done. A sales book that shows all of the credit sales and a cash book which records all cash received and paid. A purchases return book records all of the purchases that have been returned to the supplier, as well as a sales return book that indicates all the sold items returned. There is also a bills received book which shows all the bills paid, along with the bills payable books that show all the bills paid such as electricity. The final books are main journals, or journal proper subsidiary books, that do not require entry into mini journals.

There are many advantages of using different subsidiary books for varying entries rather than having them in only one journal. The first advantage is that it helps keep the records brief — it is impossible to manage every single transaction in the main ledger as it occurs.

Another advantage of using the subsidiary books of accounting makes it easy to track transactions and avoids the cluttering that would occur if all of the different information was in one place. The separated information saves the need to give extended details of the transaction and makes future references easy and simple. The primary records are classified according to the nature of the transactions.

The third advantage is that the subsidiary books reduce cases of fraud. The journal entries are done in chronological order, meaning that the dates follow each other, and it involves detailed postings to other accounts. What this means is that it is almost impossible to manipulate all the books involved, but if it is done, the detection is quite simple.

The posting in the primary records can be assigned to different accounting clerks, thus it is accurate and faster during the processing phase of accounting. Each clerk plays their part and gives the records to others for further processing and reconciliation. This too eliminates the opportunities of fraud within the businesses. It would take more than one clerk to successfully commit fraud and conceal it.

Lastly, the primary records indicate separate transactions of similar natures, thus any needed analysis is made convenient. This saves time and many other resources. The accuracy of the records is also enhanced greatly for they play a large role in determining the financial health of individual company.

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