Accounting Books

Accounting Books

SUBSIDIARY BOOKS

Sub-division of journal:

1. Cash Book-All cash transactions are recorded in the cash book.

2. Purchase Day Book-All credit purchases of goods not assets are recorded in it.

3. Sales Day Book- All credit sales of goods not assets are recorded in it.

4. Purchases Returns Book-Returns out of credit purchases are recorded in it.

5. Sales Returns Book- Returns out of credit sales are recorded in it.

6. Bills Receivable Book-Receipt of bills from debtors is recorded in it.

7. Bills Payable Book- Issue of bill to creditor is recorded in it.

8. Journal Proper- Transactions not recorded in the above books are recorded in this book. It is divided in four parts which are as followsi)

Opening Entries ii) Closing Entries iii) Adjustment Entries iv) Rectification Entries

Important Points:

i) Sales tax is calculated on net price i.e. price after deduction of trade discount.

ii) Excise duty and other local taxes are calculated on gross price i.e. the price before deduction of trade discount.

QUESTIONS:

1. Credit purchases of goods are recorded in the a) Cash Book b) Purchase Book c) Journal Proper Book d) Journal Book

2. Credit sale of assets is recorded in the a) Cash Book b) Sales Book c) Journal Proper Book d) Sales Return Book

3. Recovery of money earlier written off as bad debt is recorded in the a) Cash Book b) Journal Proper Book c) Sales Book d) Purchases Book

4. Cash paid for return of goods is recorded in the a) Cash Book b) Return Inward Book c) Return Outward Book d) Either a or b

5. A separate column for cash discount is prepared in the a) Purchases Book b) Sales Book c) Cash Book d) Journal Proper Book

6. Sales tax is calculated on a) Gross Price b) Net Price c) Either a or b d) Neither a or b

7. Excise duty is calculated on a) Gross Price b) Net Price c) Either a or b d) Neither a or b

8. A debit note issued by us for goods return is accounted for a) Purchase Return Book b) Sales Return Book c) Journal Proper Book d) Cash Book

9. Salary outstanding is recorded in the a) Purchase Return Book b) Sales Return Book c) Journal Proper Book d) Cash Book

10. Cash received Rs. 1000 in full settlement of a debt of R. 1010. Discount allowed in this case recorded in the a) Purchases Book b) Sales Book c) Cash Book d) Journal Proper Book

11. The purchase day book is a part of a) journal b) Ledger c) Trial Balance d) Balance Sheet

Cash Book

Cash Book- Cash Book is a Subsidiary Book. It is also called Primary Book. It is also called journalized ledger as it serves the purpose of the Journal and Ledger. It is a Real A\C. Inflow of cash is recorded on the debit side and outflow of cash is recorded on the credit side.

Kinds of Cash Book

1. Single Column Cash Book

2. Double Column Cash Book

3. Triple Column Cash Book

Petty Cash Book- In big business houses under main cashier a petty cashier is appointed. He is entrusted the task of making small payments.

Imprest Petty Cash-Under this system petty cashier is given a fixed amount to make the small payments and at the end of each month he is reimbursed the amount he has paid during the amount so that the minimum amount (called imprest amount) can be maintained.

Contra Entries- When entries for the same transactions are recorded on the both side of the cash book, those entries are called contra entries

Bank Reconciliation Statement

Bank Reconciliation Statement-

Important Points-

A. Cash Book is maintained by ‘The Business’.

Pass Book is maintained by ‘The Bank’.

B. Cash Book debit balance means ‘Favorable Balance’.

Cash Book credit balance means ‘Unfavorable or Overdraft Balance’.

Pass Book debit balance means ‘Unfavorable or Overdraft Balance’.

Pass Book credit balance means ‘Favorable Balance’.

C. Cash Book-Debited indicates ‘Increase in Bank Bal’.

Cash Book-Credited indicates ‘Decrease in Bank Bal’.

Pass Book-Debited indicates ‘Decrease in Bank Bal’.

Pass Book-Credited indicates ‘Increase’ in Bank Bal.

There are four reasons why balance of Cash Book does not agree with the balance of Pass Book:

1. Entries recorded in the Cash Book but not recorded in the Pass Book.

2. Entries recorded in the Pass Book but not recorded in the Cash Book.

3. Some wrong treatment in Cash Book.

4. Some wrong treatment in Cash Book.

Amended Cash Book- Sometimes before preparing B.R.S. an Amended Cash Book is prepared which gives revised bank balance as per Cash Book and with the revised bank balance B.R.S. is prepared.

Entries to be recorded in the Amended Cash Book-

1. Wrong entries passed in the Cash Book.

2. Entries not recorded in the Cash Book.