This GSEB Class 11 Commerce Accounts Notes Part 1 Chapter 6 Subsidiary covers all the important topics and concepts as mentioned in the chapter.
Subsidiary Class 11 GSEB Notes
Firstly, economic transactions of the business are entered in the rough book. Then, these transactions are recorded in the hierarchy of the date in journal. In the journal all the transactions related to individuals, incomes- expenses or goods-assets are recorded. It is more convenient to record all the business transactions in one book when the size of business is small but when the number of transactions are more and size of business is big then following inconveniences are experienced while writing all the business transactions in the journal:
- In writing journal entry,
- For ledger posting,
- To prepare the accounts in time and
- To complete the entries at the end of the year.
With an objective, to remove the above inconveniences and to prepare the books of accounts quickly, efficiently and without any error, journal is divided into some sub-divisions which are known as subsidiary books. The method of preparing subsidiary books is also known as the practical method of preparing the books of accounts.
→ Journal is also known as Book of Prime or Book of Original entries. In which all business transactions are recorded.
→ When the number of transactions increase in large number, entering all transactions in one book becomes difficult. Most of the transactions are repeated frequently. Therefore similar types transactions are recorded in separate book. This separate book is known as Subsidiary Book.
→ Subsidiary books are also known as Day Books.
→ As per the requirement of business, following subsidiary books are prepared :
- Purchase book,
- Sales book,
- Purchase Return book,
- Sales Return book,
- Cash book,
- Petty Cash book,
- Bills Receivable book,
- Bills Payable book and
- Journal Proper.
→ In purchase book, only credit purchase of goods are recorded. It is also known as Credit Note Book.
→In sales book, only credit sales of goods are recorded. It is also known as Debit Note Book.
→ Purchase return book is also known as Goods Return Debit Note Book.
→ When the goods purchased on credit are returned to the supplier, the note sent to the supplier to claim rebate for the returned goods is known as Debit Note. It is an important document for preparation of purchase return book.
→ Sales return book is also known as Goods Return Credit Note Book.
→ When the goods sold on credit are returned by the customer, then customer’s account will be credited. And customer is informed by a document, which is written in some specific manner is known as ‘Credit Note’. It is an important document for the preparation of sales return book.
→ There are two types of purchase book: (1) Simple purchase book and (2) Columnar purchase book.
→ There are two types of sales book : (1) Simple sales book and (2) Columnar sales book.
→ Net amount (after deducting trade discount) of credit purchase and credit sales are recorded in purchase book and sales book.
→ At the end, total amount of credit purchase well be recorded on debit side of Purchase A/c.
→ At the end, total amount of credit sales will be recorded on credit side of Sales A/c.