What is subsidiary book?
Solution:
We record transactions by identifying them as financial and non-financial. All financial transactions are first recorded in a Journal. A small business will have a lesser number of transactions and therefore it is possible to record all business transactions in one book. However, in contrast with large business organizations, the number of a business transaction are also large. It is a very time-consuming, difficult, and tedious task for a firm to record such voluminous transactions and events in one single book. Thus, in order to save time and effort, we sub-divide the Journal to record the transactions of similar nature in a separate book. These sub-divided Journals are popularly known as Subsidiary Books. Sub-division of Journal provides division of work which leads to the improvement in efficiency and effectiveness.
Subsidiary books are Purchases Book, Sales Book, Cash Book, etc.
We record transactions by identifying them as financial and non-financial. All financial transactions are first recorded in a Journal. A small business will have a lesser number of transactions and therefore it is possible to record all business transactions in one book. However, in contrast with large business organizations, the number of a business transaction are also large. It is a very time-consuming, difficult, and tedious task for a firm to record such voluminous transactions and events in one single book. Thus, in order to save time and effort, we sub-divide the Journal to record the transactions of similar nature in a separate book. These sub-divided Journals are popularly known as Subsidiary Books. Sub-division of Journal provides division of work which leads to the improvement in efficiency and effectiveness.
Subsidiary books are Purchases Book, Sales Book, Cash Book, etc.