Subdivision of Journal

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Subdivision of Journal:

Subdivision of Journal Though the principle of journalising all transactions, known as continental system of bookkeeping is quite perfect in actual business but in a large business it is found inconvenient to Journalise every transaction and sometime it becomes rather impossible for one man to Journalise numerous transactions on a business in one journal. Therefore, the journal is sub-divided into different journals known as the subsidiary books or books of prime entry or books of original entry .

Important subsidiary books used in modern business world are :

Important subsidiary books used in modern business world are 1. Cash Book: It is used to record all cash receipts and payments. 2. Purchases Book: It is used to record all credit purchases. 3. Sales Book: It is used to record all credit sales 4. Purchases returns book: It is used to record all goods returned by us to our suppliers. 5. Sales Returns Book: It is used to record all goods returned to us by our customers. 6. Bills Receivable Book: It is used to record all accepted bills received by us. 7. Bills payable Book: It is used to record all bill accepted by us to our creditors. 8. Journal Proper: It is used for recording those transactions for which there is no separate book.

Advantages of subsidiary Journals:

Advantages of subsidiary Journals 1. It may be impossible to record each transaction into the ledger as it occurs. Subsidiary books record the details of the transactions and therefore, helps the ledger to become brief. 2. As similar transactions are recorded together in the same book, future reference to any of them becomes easy. 3. The chance of fraudulent alteration in an account is reduced as the book of original entry keeps records of the transactions in a chronological order. 4. The work of posting can be entrusted to several clerks at the same time and thus the ledger of a large business can be written up much more quickly. 5. As each journal contains separately transactions of similar nature any desired analysis can be made conveniently.

Cash Book :

Cash Book Cash book is a book of original entry in which transactions relating only to cash receipts and payments are recorded in detail. When cash is received it is entered on the debit or left hand side. Similarly, when cash is paid out the same is recorded on the credit or right hand side of the cash book. The cash book, though it serves the purpose of a cash book of original entry viz., cash journal really it represents the cash account of the ledger separately bound for the sake of convenience. It is more a ledger than a journal. It is journal as cash transactions are chronologically recorded in it. It is a ledger as it contains a classified record of all cash transactions. The balances of the cash book are recorded in the trial balance and the balance sheet.

Vouchers:

Vouchers For Every entry made in the cash book there must be a proper voucher. Vouchers are documents containing evidence of payment and receipts. When money is received generally a printed receipt is issued to the payer but counterfoil or the carbon copy of it is preserved by the cashier. The copy receipts are called debit vouchers, and they support the entries appearing on the debit side of the cash book. Similarly when payment is made a receipt is obtained from the payee. These receipts are known as credit vouchers. All the debit and credit vouchers are consecutively numbered. For ready reference the number of the vouchers are noted against the respective entries. A column is provided on either side of the cash book for this purpose.

Balancing Cash Book: :

Balancing Cash Book: The cash book is balanced at the end of a given period by inserting the excess of the debit on the credit side as "by balance carried down" to make both sides agree. The balance is then shown on the debit side by "To balance brought down" to start the next period. As one cannot pay more than what he actually receives, the cash book recording cash only can never show a credit balance.

Format:

Format Date Particulars LF Amount Date Particulars LF Amount

Single Column Cash Book:

Single Column Cash Book Single column cash book records only cash receipts and payments. It has only one money column on each of the debit and credit sides of the cash book. All the cash receipts are entered on the debit side and the cash payments on the credit side. While writing a single column cash book the following points should be kept in mind: 1. The pages of the cash book are vertically divided into two equal parts. The left hand side is for recording receipts and the right hand side is for recording payments. 2. Being the cash book with the balance brought forward from the preceding period or with what we start. It appears at the top of the left side as "To Balance" or "To Capital" in case of a new business.

Single Column Cash Book:

Single Column Cash Book 3. Record the transactions in order of date. 4. If any amount of cash is received on an account, the name of that account is entered in the particulars column by the word "To" on the left hand side of the cash book. 5. If any amount is paid on account, the name of the account is written in the particulars column by the word "By" on the right hand side of the cash book. 6. It should be balanced at the end of a given period.

Posting:

Posting The balance at the beginning of the period is not posted but other entries appearing on the debit side of the cash book are posted to the credit of the respective accounts in the ledger, and the entries appearing on the credit side of the cash book are posted to the debit of the proper accounts in the ledger

Double Column Cash Book: :

Double Column Cash Book: A double column cash book or two column cash book is one which consists of two separate columns on the debit side as well as credit side for recording cash and discount. In many concerns it is customary for the trader to allow or to receive small allowance off or against the dues. These allowances are made for prompt settlement of accounts. In certain business almost all receipts or payments are accompanied by such discounts and in order to avoid unnecessary postings separate columns in the cash book are introduced to record the discounts received or allowed. These discount columns are memorandum columns only. They do not form the discount account. The discount column on the debit side of the cash book will record discounts allowed and that on the credit side discounts received.

Posting: :

Posting: The cash columns will be posted in the same way as single column cash book. But as regards discount column, each item of discount allowed (Dr. side of the cash book) will be posted to the credit of the respective personal accounts. Similarly each item of discount received will be posted to the debit of the respective personal account. Total of the discount column on the debit side of the cash book will be posted to the debit side of the discount account in the ledger and the total of discount column on the credit side of the cash book on the credit side of the discount account. The discount columns are not balanced like cash column of the tow column cash book.

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