Subsidiary Books And Source Documents

INTRODUCTION
There are two books of accounts, namely:
1. Principal books.
2. Subsidiary books.

Let it be noted that the two books are very necessary in the recording of financial transactions. All transactions must must pass through the books of accounts.
The subsidiary books are explained below while you are to click here for the the principal books.


SOURCE DOCUMENTS
All entries in the books must be supported by documentary evidence. Thus, the source documents provide very detailed information for the books' preparation. The documents are:

1. Invoice.
2. Credit note.
3. Debit note.
4. Petty cash voucher.
5. Statement of account.
6. Receipts.

 INVOICE
The invoice sets out the full details of goods sent to the buyer  by the suppliers or sellers giving information about the price, quantity as well as discount given and even the terms of payment.

CREDIT NOTE
This is a document sent to the customers by the seller for reduction in the amount owed by the him. It arises because some goods are damaged or not supplied as ordered. There has been an overcharge on some goods returned. To avoid confusion, it should be printed in red color. It can be viewed from two ways:

• Credit note received from suppliers:- If the credit note is connected to the suppliers, it will be recorded in the returns outwards look and then debited to the suppliers account.
• Credit note issued to customers:- This is required to be posted to the returns inwards look and then credited to the account of the customers.

DEBIT NOTE
This is a document sent by the seller to the buyer to correct an undercharge or when goods are not charged to the invoice.
The buyer can also use it to claim an overcharge or for items returned to a seller. Debit note is sent to customers to increase their indebtedness.

PETTY CASH VOUCHERS
This covers payments that are credited to the petty cash book.

STATEMENT OF ACCOUNTS
This is a document sent to the buyer by the seller at regular intervals, showing the credits and debits to the account and the balance due.

Presentation of Original Books and their sources

SUBSIDIARY BOOKS	SOURCE DOCUMENTS
Purchases day book or journal	Incoming invoices, debit notes received
Sales day book or journal	Outgoing invoices, debit notes issued
Returns outwards book	Incoming credit notes
Sales returns book	Credit notes sent out
Cash book	Incoming cheques, till slips, receipts.
Petty cash book	Petty cash vouchers.

SUBSIDIARY BOOKS
Having analyzed the sources of information for the subsidiary books. Then, we can now define subsidiary books as the books of original or prime entry. They are used to make first entry of transactions. before any entry can be made in the ledgers, it must first be recorded in the subsidiary books. The subsidiary books do not form part of the double entry.

Reasons for Subsidiary books
1. To know the total purchases and sales.
2. They are used as books to making first entry of transactions.
3. To keep tract  of the people who owed money of the people who owed money and of the people to whom money is owed.

Division of Subsidiary books
They can be divided into six books, which will be expatiated separately to show their nature. They are listed as follows:
1. Sales day book or sales journal
2. Purchases day book or purchases journal
3. Sales returns or returns inwards journal
4. Purchases returns or returns outwards journal
5. General journal or principal journal or journal proper
6. cash book 

Read the continuation here.