Subsidiary Books (Forms 1–3)

Arts 1–4

Foreign Languages 1–4

Introduces journals and books of original entry including cash book, sales/purchases journals, and petty cash book.

📘 Topic Summary

This study guide covers the principles of accounting for subsidiary books, including journals and books of original entry such as cash book, sales/purchases journals, and petty cash book. It provides a comprehensive overview of the concepts and processes involved in recording and analyzing financial transactions.

📖 Glossary

Journal: A book or electronic record where accounting entries are initially recorded.
Book of Original Entry: A journal or ledger where transactions are first recorded.
Cash Book: A subsidiary book that records all cash receipts and payments.
Sales Journal: A subsidiary book that records all sales transactions.
Purchases Journal: A subsidiary book that records all purchases transactions.

⭐ Key Points

Subsidiary books are used to record and classify financial transactions.
Journals are used to initially record accounting entries, while ledgers are used for permanent recording.
Cash book is a subsidiary book that records all cash receipts and payments.
Sales journal and purchases journal are used to record sales and purchases transactions respectively.
Petty cash book is used to record small cash transactions.

🔍 Subtopics

Introduction to Subsidiary Books

Subsidiary books are auxiliary records used in accounting to classify and record specific transactions. They provide a detailed and organized way of recording financial data, making it easier to prepare financial statements. The main purpose of subsidiary books is to support the general ledger by providing additional information about specific accounts or transactions.

Cash Book

The cash book is a subsidiary book that records all monetary transactions involving cash receipts and payments. It is used to record the flow of cash in and out of a business, including deposits, withdrawals, and transfers. The cash book helps accountants identify and record cash transactions accurately, ensuring that financial statements are reliable.

Sales Journal

The sales journal is a subsidiary book used to record all sales transactions made by a business. It provides a detailed record of each sale, including the date, customer name, product sold, and amount received. The sales journal helps accountants track sales revenue, identify trends, and prepare financial statements.

Purchases Journal

The purchases journal is a subsidiary book used to record all purchases made by a business. It provides a detailed record of each purchase, including the date, supplier name, product purchased, and amount paid. The purchases journal helps accountants track expenses, identify trends, and prepare financial statements.

Petty Cash Book

The petty cash book is a subsidiary book used to record small transactions involving petty cash, such as office supplies or minor repairs. It provides a detailed record of each transaction, including the date, description, and amount spent. The petty cash book helps accountants track and control petty cash expenses.

Recording Transactions in Journals

Transactions are recorded in journals by entering the necessary information, such as date, description, and amount. The journal is then used to post transactions to the general ledger, ensuring that financial statements are accurate and up-to-date.

Posting Transactions to Ledgers

Transactions recorded in journals are posted to ledgers by transferring the necessary information from the journal to the ledger. This process ensures that all transactions are accurately recorded and reflected in financial statements.

Verification of Recorded Transactions

The verification process involves checking recorded transactions for accuracy, completeness, and compliance with accounting standards. It helps accountants identify errors or discrepancies, ensuring that financial statements are reliable and trustworthy.

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