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Journal Types

The document explains subsidiary books, which are specialized journals used in accounting to record transactions of similar nature, particularly when a business has a high volume of transactions. Key types of subsidiary books include Cash Book, Sales Book, Purchase Book, and others, each serving specific recording purposes. It also defines credit and debit notes related to the return of goods and emphasizes the importance of mastering these journal types for accurate accounting.

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60 views12 pages

Journal Types

The document explains subsidiary books, which are specialized journals used in accounting to record transactions of similar nature, particularly when a business has a high volume of transactions. Key types of subsidiary books include Cash Book, Sales Book, Purchase Book, and others, each serving specific recording purposes. It also defines credit and debit notes related to the return of goods and emphasizes the importance of mastering these journal types for accurate accounting.

Uploaded by

mythris322
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Types of Journal

Subsidiary Books explained


like never before !
What are Subsidiary
Books?
Journals are the first step in accounting cycle-
where transactions are recorded for the first time.
(a.k.a ‘Books of origial entry’)

Journals are subdivided into subsidiary books.


Each subsidiary book record the transactions that
are of similar nature.
Why need Subsidiary
Books?
When size of business grows and transactions
become very large, it is not possible to record all
transactions in one journal ONLY.

So journal is subdivided into some ‘special


journals’ called- Subsidiary Books.
Key types of Subsidiary
Books-
1. Cash Book

2. Sales Book

3. Sales Return Book

4. Purchase Book

5. Purchase Return Book

6. Journal Proper
1. Cash Book
Cash Book is used to record all transactions
of receipts and payments relating to cash and
bank.

Cash book serves a dual purpose- it is both


the journal and an account. Hence, no
separate cash/bank account is opened in the
ledger.

Cash book is of 4 types- Single column,


double column, triple column, and petty cash
book.
2. Purchase Book
All credit purchase of goods is recordrd in
this book.

‘Goods’ refer to all those things the business


deals with, and is meant for resale.

Transactions not recorded in cash book are-


(A) Cash purchases
(B) Purchase of asset
3. Purchase Return Book
(also called ‘Return outward Book’) This
book is used to the return of goods that were
purchased on credit basis.

There can be various reasons for returning


the goods to suppliers like-
👉
Defective goods
👉
Not delivered on time
👉
Goods not as per sample
👉
More priced
3. Sales Book
All credit sale of goods is recorded in this
book.

Transactions not recorded in sales book are-


(A) Cash sales
(B) Sale of an asset
5. Sales Return Book
(also called ‘Return Inward Book’) This book
is used to record the return of goods that
were sold on credit basis.

Just like purchase return,


there can be various reasons
for return of sold goods as
well.
6. Journal Proper

After recording treansactions in various


subsidiary books, there are some
transactions which cannot be recorded in any
other subsidiary book.

Some example of such treansactions are-


👉
Opening entries
👉
Closing entries
👉
Adjustment entries
👉
Asset purchased on credit
👉
Discounts allowed and received
👉
Bad debts
What is ‘Credit Note’ &
‘Debit Note’
A credit note is a document that seller sends
to buyer to reduce the amount the buyer owes
to him.
This often happens when goods are returned
by buyer. Thus, buyer’s (/ debtor’s) account
is credited in seller’s books.

The same note is called ‘debit note’ by the party


who is returning the goods
💬Mastering these journal types is the first step
toward confident and accurate accounting.

💡Like this post if you learnt something new


📲Follow and share for more finance tips !

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