Unit 3 Introduction of Subsidiary book.pdf

Unit 3 Introduction of Subsidiary book.pdf

• 1.
  Accounting- Unit 3 SubsidiaryBook Dr. Bharath V Faculty, Department of Management
• 2.
  Meaning of SubsidiaryBooks • Subsidiary books are sub-divisions of journals in each of which transactions of similar nature are recorded. • These are the books of prime entry. Instead of recording in one journal, the transactions are recorded in a number of prescribed books. 2
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  Types of SubsidiaryBooks 3
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  • Example: On 5thFeb, goods worth ₹20,000 were purchased on credit from M/s Meena Textiles. 4
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  Advantages of subsidiarybooks • Proper and systematic record of business transactions • Convenient posting • Division of work • Efficiency • Helpful in decision making • Prevents errors and frauds • Availability of requisite information at a glance • Detailed information available • Labour of posting is reduced 5
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  Cash Book –Introduction • Cash book is the book in which only cash transactions are recorded in the chronological order. • The cash book is the book of original entry or prime entry as cash transactions are recorded for the first time in it. • Cash receipts are recorded on the debit side while cash payments are recorded on the credit side. 6
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  Types of Cashbook • Simple or single column cash book (only cash column) • Cash book with cash and discount column (double column cash book) • Cash book with cash, discount and bank columns (three column cash book). 7
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  Single column cashbook 8
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  Enter the followingtransactions in a single column cash book of Pradeep for April, 2025 9 2025 Jan Particulars ₹ 1 Commenced business with cash 27,000 5 Bought goods for cash 6,000 10 Goods sold for cash 11,000 13 Paid into bank 5,000 14 Goods sold to Sangeetha for cash 9,000 17 Goods purchased from Preethi on credit 13,000 21 Purchased stationery by cash 200 25 Paid Murugan by cash 14,000 26 Commission paid by cash 700 29 Drew from bank for office use 4,000 30 Rent paid by cheque 3,000
• 10.
  Prepare the SingleColumn Cash Book of Mr. Arun for April 2025 10 April 1: Cash in hand ₹80,000 April 2: Purchased goods for cash ₹15,000 April 3: Paid wages ₹2,500 April 5: Received from Anil ₹12,000 April 8: Paid to Mohan ₹6,000 April 10: Cash sales ₹25,000 April 12: Paid rent ₹4,000 April 15: Bought furniture for cash ₹18,000 April 18: Received from Suresh ₹20,000 April 20: Paid salary ₹8,000 April 22: Withdrawn for personal use ₹5,000 April 25: Paid electricity bill ₹2,200 April 28: Cash sales ₹30,000 April 30: Paid stationery ₹1,800
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  Double column cashbook (Cash book with cash and discount column) 11
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  Differences between cashdiscount and trade discount 12 Basis Cash Discount Trade Discount 1. Purpose Cash discount is allowed to encourage the buyers of goods to make payment at an early date Trade discount is allowed to encourage buyers to buy goods in large quantities 2. Time of allowance Cash discount is allowed by the seller or creditor to the buyer or debtor at the time of making payment Trade discount is allowed by the seller to the buyer when goods are sold. 3. Amount of discount Cash discount is related to time. The earlier the payment, the more will be the cash discount. Trade discount is generally related to the quantity of purchase or sale. The more the purchase, the more will be the rate and amount of discount. 4. Recording in the books of accounts Cash discount is recorded in the books of account. Cash discount allowed is shown on the debit side of cash book. Cash discount received is shown on the credit side of the cash book. Trade discount is not recorded in the books of account. No journal entry is made for the same. Details are just shown in the purchases or sales book. 5. Deduction from invoice value Cash discount is not deducted from the invoice value of goods Trade discount is deducted from the list price of the goods.
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  Enter the followingtransactions in a cash book with cash and discount columns 2025 Jan Particulars ₹ 1 Cash in hand 11,500 5 Paid to Ramanathan by depositing in cash deposit machine 300 Discount allowed by him 10 8 Purchased goods for cash 400 10 Cash received from Rajagopal 980 Discount allowed 20 15 Sold goods for cash 400 21 Paid cash to Shanthi 295 Discount received 5 25 Paid wages by cash 50 31 Paid to Sanjeev ₹390 in full settlement of his account 400 13