If the transactions of the enterprise are voluminous, to ease the process of posting the transactions, the transactions should be classified into two categories. The transactions are segmented one on the basis of regular and another on the basis of non-regular occurrence.
The regular / frequent occurrence of transactions are recorded only in the separate books which are known as subsidiary book of accounts or subsidiary journals instead to record in the regular journal. The infrequent transactions are recorded / posted in the original journal or Journal proper which do not have any specific subsidiary journal or subsidiary books.
The subsidiary journals or books are developed by the firms only based on the occurrence of the transactions. Normally the frequent occurrence of the transactions of the firm are major formation of the subsidiary books of the accounting system.
The following are the subsidiary books on the major frequent occurrence of transactions
Subsidiary books are classified on the basis of transactions viz Cash transactions and Non-cash transactions First, let us discuss the Non-cash transactions
What is meant by the Non-cash transaction?
The Non-cash transaction is a transaction out of credit terms and conditions of the enterprise.
The Non cash transactions shall include the following transactions of the enterprise, which do not involve any cash ; are as follows
The purchase book is called in other words as purchase journal. It is a book meant for credit purchases only for resale.
The purchase book usually contains various components viz.
Name of the supplier - From whom the raw material were procured on credit
Ledger folio - It is the number of the page where the journal entry is transacted.
Inward Invoice No - The book contains the invoice number of the credit purchase of the goods from the supplier
Amount (Rs) -The book contains the value of credit purchase transactions from the supplier.
Steps involved in posting the entries:
Purchase Returns Book
This is a book of goods returned to the supplier which are out of credit purchases.
The return of goods out of the credit purchase is due to non confirmation with the specification mentioned in the order.
The purchase returns book consists of various components viz
Name of the supplier - To whom the goods/ raw material purchased , were returned
Ledger folio - It is the number of the page where the journal entry is posted
Debit Note No -It is the page number on the original copy of the document sent to the firm to whom the goods are sent
Amount (Rs) -The book should illustrate the value of goods/raw materials returned out of credit purchase
It is a book maintained by the enterprise only during the moment of selling the goods on credit. It is pronounced in other words as sales journal.
The sales normally contains the following components
Name of the customer - The sales book usually records the name of the buyer who has been sold the goods or raw materials on credit
Ledger Folio - The page number where the journal entry is posted / transacted
Out Ward Invoice No- This book registers the invoice number of the goods / raw materials sold out to the buyers on credit.
Amount (Rs)- It is fundamental document to earmark the value of the goods/raw materials sold out on credit to the various buyers. It facilitates the firm to identify the amount of sales transacted on credit as well as to collect the amount of dues from the buyers.
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