SUBSIDIARY ACCOUNTS HAVE TO BE PREPARED

If the transactions of the enterprise are voluminous, to ease the process of posting the
transactions, the transactions should be classified into two categories. The transactions
are segmented one on the basis of regular and another on the basis of non-regular
occurrence. The regular / frequent occurrence of transactions are recorded only in the separate
books which are known as subsidiary book of accounts or subsidiary journals instead to
record in the regular journal. The infrequent transactions are recorded / posted in the
original journal or Journal proper which do not have any specific subsidiary journal or
subsidiary books. The subsidiary journals or books are developed by the firms only based on the occurrence
of the transactions. Normally the frequent occurrence of the transactions of the firm are
major formation of the subsidiary books of the accounting system.
Subsidiary books are classified on the basis of transactions viz Cash transactions and
Non-cash transactions First , let us discuss the Non-cash transactions
What is meant by the Non-cash transaction?
The Non-cash transaction is a transaction out of credit terms and conditions of the
enterprise. The Non cash transactions shall include the following transactions of the enterprise,
which do not involve any cash ; are as follows
Credit Sales Book
Credit Purchases Book
Credit Sales Return Book
Credit Purchases Return Book
Bills Payable Book - Out come of Credit transaction
Bill Receivable Book - Out come of Credit transaction
Purchase Book
The purchase book is called in other words as purchase journal . It is a book meant for
credit purchases only for resale
The purchase book usually contains various components viz.
Name of the supplier - From whom the raw material were procured on credit
Ledger folio - It is the number of the page where the journal entry is
transacted.
Inward Invoice No - The book contains the invoice number of the credit
purchase of the goods from the supplier
Amount (Rs) -The book contains the value of credit purchase
transactions from the supplier.
Steps involved in posting the entries:
l Posting the entries pertaining to the individual accounts into the Purchase journal
l The total of the purchase journal is determined on monthly and finally should be
posted into debit side of the purchase account- To satisfy the rule of Real Account;
which not only contains the cash purchase but also the credit purchase of the firm
during the year.
Purchase Returns Book
This is a book of goods returned to the supplier which are out of credit purchases.
The return of goods out of the credit purchase is due to non confirmation with the
specification mentioned in the order.
The purchase returns book consists of various components viz
Name of the supplier - To whom the goods/ raw material purchased , were returned
Ledger folio - It is the number of the page where the journal entry is posted
Debit Note No -It is the page number on the original copy of the document
sent to the firm to whom the goods are sent
Amount (Rs) -The book should illustrate the value of goods/raw materials
returned out of credit purchase
Steps involved:
Posting the entries of the purchase returns to the individual suppliers' account into
the purchase return journal
The monthly total of the purchase journal is credited into the purchase return account
Sales Book
It is a book maintained by the enterprise only during the moment of selling the goods on
credit. It is pronounced in other words as sales journal
The sales normally contains the following components
Name of the customer - The sales book usually records the name of the buyer
who has been sold the goods or raw materials on credit
Ledger Folio - The page number where the journal entry is posted / transacted
Out Ward Invoice No- This book registers the invoice number of the goods /
raw materials sold out to the buyers on credit.
Amount (Rs)- It is fundamental document to earmark the value of the
goods/raw materials sold out on credit to the various
buyers. It facilitates the firm to identify the amount of
sales transacted on credit as well as to collect the
amount of dues from the buyers

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