Types of Subsidiary Book

Special books are maintained on the basis of characteristics of financial transactions of a business enterprise. The special booksfalling under subsidiary books are as follows:

Purchase Book

Purchase Book is the first entry of all goods purchased on credit. It is the primary record of all the credit purchases, which are either for reselling or further processing. It does not record cash purchase.

Example:
Ashoj 6 = Purchased from Kamala, Kathmandu 25 pieces of register@ Rs. 60 10 dozens of pencil @Rs.15
Ashoj 9 = Sarala, Balaju 20 pieces of board marker@Rs. 35 15 pieces of duster @Rs. 10

Purchase Book

Purchase Return Book

Purchase return book is the first entry of all goods returned to suppliers. It is the primary records of all the purchase returns. When the good purchased is found defective, damaged, in an excess quantity and not as per the order placed, they can be returned to the supplier. It is prepared on the basis of a debit note.

Example:
Jan 4 = Goods of Rs 1700 returned to Burning store, Baneshwor
Jan 16 = Returned to Shinning Store, Banepa 2 quintals Basmati rice@ Rs. 2800 25 kg Mansuli rice@ Rs. 22

Purchase Return Book

Cash Book

A cash book is the primary records of all the receipts and payments made in cash and through a bank. It has the features of the subsidiary book as well as the principal book. Mainly, it is a subsidiary book as it is the first entry of all the cash and banking transaction. It is a part of the principal book or ledger as it serves the purposes of cash and bank accounts in the ledger.

Sales Book

Sales book is the first entry of all the goods sold on credit. It is also known as sales journal. It is the primary record of all the credit sales. It does not record cash sales. It is prepared on the basis of the outward invoice sent out to the customer.

Example:
Kartik 29= Sold to Kriza, Basundhara 2 sets 20"LG TV@Rs. 17500 3 sets 21"Sony TV@ Rs. 27500
Kartik 30 = Sold to Nimisha, Kathmandu
5 pieces of calculator @Rs. 650 3 sets of Telephone @ Rs. 1050

Sales Book

Sales Return Book

Sales return book is the first entry of all the goods returned by customers. It is the primary records of all the sales returns. The sales return book is prepared on the basis on the basis of credit note sent to the customer.
Example:
a. Returned by Suraj Furniture Center: 3 chairs@ Rs.1300
b. Returned by Maanik Furniture Center: 2 sofa sets@ Rs.6500 and 3 Tables @ Rs.1500

Sales Return Book

Journal Proper

Journal proper is a subsidiary book that records only non- recurring transactions in chronological order. It records those transactions for which no separate subsidiary book has been provided. Credit purchase and sale of assets, bad debts, depreciation and goods withdrawn by the proprietor are some of the examples of transactions, which are recorded in the journal proper.

Invoice

An invoice is received from the supplier while buying goods and it is sent to the customer while selling goods. It is a statement, which is prepared and sent out by the seller along with the goods to buyer mentioning the details of the goods. It states the items of goods, quantity, unit price, total amount, and discount allowed, expenses incurred on behalf of the buyer and net payable amount. It represents the sale transaction. It serves as the basis for maintaining records in the purchases and sales book.

Discount

Discount is a reduction either in the list price of goods being purchased or in the amount of debt being paid. Discount can be classified into two types:

• Trade discount
  It is a reduction in the list price of goods being purchased. It is offered by the seller so as to encourage the buyer to purchase goods in bulk. However, it is not recorded in any book. Therefore, the purchase of goods transaction is recorded with the net amount derived after subtracting trade discount out of the invoice price. The reduction of price of goods at the time of purchase including cash purchase out of the invoice price is treated as trade discount.
  
  
• Cash discount
  It is a reduction in the amount of debt being paid. It is offered by the creditor to the debtor so as to motivate the debtor to make the payment promptly within a specified time. Cash discount allowed to the debtor is an expense and cash discount received from the creditor is an income. Therefore, cash discount is recorded in the books of account.