Subsidiary books could be thought of as books of prime entry where transactions of a particular category are noted. Put simply, to avoid wasting time and energy, the transactions which are of similar character are recorded in separate books, they are called subsidiary books or subdivision of journal. It is advisable to make use of special subsidiary books, in addition to the journal, for recording, various types of transactions.
What are the Advantages of Subsidiary Books in Accounting ?
1. A significant advantage of these subsidiary books is that their use makes it possible for division of labour which is extremely important in a large organisation. For instance, one clerk may record nothing but credit sales of goods, another nothing but purchases of goods on credit, another nothing but cash receipts and still another nothing but cash payments and so on.
2. The amount of space needed for the record of same transactions is lowered.
3. The volume of postings to ledger accounts is substantially minimized. For example, by using sales journal, it is possible to obtain the total amount of thousands of credit sales transactions from the amount column of the sales journal and post it as one credit to the sales account.
4. Work is delegated to each and every employee, which ensures in evaluating the efficiency of individual employees, as specialisation usually leads to efficiency. When a specific task is done again and again, the activity may result in enhanced efficiency while it enables one to eliminate mistakes. That is how the efficiency can be increased amid the accountants of a business organization.
5. Accounting work is split to record transactions in a variety of subsidiary books. If the jobs are divided in such a fashion that the work of one person is automatically checked by someone else, it would be an easy task to identify errors and correct them immediately.
6. It becomes easy to access the details associated with a specific transaction as the transactions associated with one head are recorded in a separate book.
In earlier times, traders used to maintain record of the transaction in the journal. But it was later found not convenient. If all the transactions are noted in the journal then the journal grows more thick and hard to handle. In big business houses, it becomes extremely hard to carry on the work of recording business transaction.
As a result nowadays large scale business firms like to keep record of transaction in subsidiary books as opposed to journal. Subsidiary books are the book of original entry and it is also called primary records because the first entry of transaction is made in subsidiary books. There are many advantages of subsidiary books which have been discussed in this article in brief.
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