What's a Subsidiary book?
A subsidiary book is a book of original entry that is used to record credit transactions of a business initially before they are posted to the ledger. The book is made in a way that it is subdivided into several types. Also known as day books, financial transactions are entered in them daily and as they occur.
A book of account used to record daily business transactions is a subsidiary book.– Jeremiah
Format of Subsidiary book
| Date | Details | Folio | Amount |
|---|---|---|---|
| 6/01/2025 | Tunde Ednut | GL1 | NGN10,000 |
Importance of Subsidiary book
1. The book can be used to know the total sales and purchases for a period.
2. Companies use it to determine their total account receivables and payables.
3. It serves as the first entry for all business transactions.
4. They are used to ensure accurate records and for control purposes.
Division of Subsidiary book
There are mainly six divisions of subsidiary books. There are four (4) Day books, a cash book, and a Journal Proper. These are discussed in this article. This article focuses on day books.
Differences between Subsidiary book and source document
| SN | Subsidiary Books | Source Documents |
|---|---|---|
| Definition | A book used to record business transactions before posting to the ledger | A document that shows evidence of business transactions |
| Examples | Subsidiary books include day books, journals and cash books | Source documents include invoices, receipts, and bank statements |
| Records | Transactions are posted from source documents to subsidiary book | Transactions entered the source document before they go to the day book |
| Uses | It is used to record transactions that occur daily in a business | It shows evidence of business transaction |
| Scope | Subsidiary books rely on source documents. Information in it is from the source documents. | This relies on business events that happen daily. When there are no transactions there is no source document |
