In source documents, transactions occur via the source documents. From the source documents, the transactions are posted to another set of books called the subsidiary books.
Thus, a subsidiary book, by way of definition, is a book into which transactions from source documents are first entered (recorded) before they are posted (or transferred) to the appropriate ledger(s).
Subsidiary books are in use in order to prevent the ledgers from containing too much details and thereby being clumsy. The subsidiary books in use are
1. Sales Day Book
2. Purchases Day Book
3. Returns Inwards Day Book
4. Returns Outwards Day Book
5. The Cash Book
6. The Journal Proper.
Sales Day Book
A sales day book is also called a sales journal. It is a book where all the credit sales from sales invoice are entered before they are transferred to the sales account. It records the day-to-day credit sales being made.
Purchases Day Book
A purchases day book is also called a purchases journal. It is a book wherein all the credit purchases are first entered before they are transferred to the purchases account. The purchases day book records all the daily credit purchases.
Returns Inwards Day Book
A returns inwards day book is also known as sales returns book or sales returns journal. It is used to record all the goods retuned back (or rejected) by customers to the business organization after being sold to them (customers). There are different reasons why customers reject goods. These include
· Sub-standard products (poor quality)
· Wrong items or products different from the ones stated on the purchasing order
· Supply/delivery in excess of request
· Overstatement in amount
· And many more
Returns Outwards Day Book
This is also called returns outwards journal or purchases returns journal. It is a book that is used to record the goods returned to suppliers for failing to meet specifications. The reasons for returning goods to suppliers are same as those for returning goods by customers.
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