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Accounting Sub Journals and Money E book

Accounting Sub Journals and Money E book

The accounting process, for recording data, entails two steps, specifically journalizing and posting. It follows that each enterprise should preserve a journal (books of authentic or prime entry) and a ledger (principal e-book). Thus the system of book-keeping initially envisages that each one the transactions have to be recorded first within the e-book of authentic report, i.e., journal after which every transaction so recorded within the journal needs to be posted within the principal e-book, i.e., ledger. Subsequently it was skilled that the labor of recording every transaction with narration within the journal after which posting every entry in two completely different accounts within the ledger was huge. The process was extra time-consuming and resulted in increased institution value.

It’s however pure that in each enterprise a lot of the transactions relate to receipts and funds of money; purchases of products ;. gross sales of products and many others. It was discovered to be handy and economical to maintain separate books to report every explicit class of transactions. Every separate e-book meant to report transactions of a selected class is the e-book of authentic or prime entry. It is usually generally known as sub-journal or subsidiary e-book. The system below which transactions of comparable nature are entered within the related’ subsidiary e-book and on the premise of which ledger is written is called the ‘sensible system of book- holding’. This technique reduces labor and time of recording the transactions as impersonal accounts, viz., gross sales account, purchases account and many others., obtain the posting of totals and never of particular person transactions. Nevertheless, this technique additionally conforms to the fundamental guidelines of the double entry system.

Usually the next subsidiary books are used within the enterprise:

(1) Money e-book : data receipts and funds of money together with transactions regarding financial institution;

(2) Purchases e-book: data credit score purchases of products meant on the market or for conversion into completed items;

(three) Returns outwards e-book: data return of the products to the suppliers attributable to a number of causes;

(four) Gross sales e-book: data credit score gross sales of the products dealt in by the enterprise;

(5) Returns inwards e-book : data the return of products by the shoppers to the enterprise ; (vi) Payments receivable e-book: data the receipts of payments of trade, promissory notes and hundies of varied events;

(6) Payments payable e-book: data the difficulty of payments trade, promissory notes and hundies to the varied events:

Benefits of sub-journals

(1) It leads to saving of time by (a) enabling the recording process to be carried on concurrently in numerous subsidiary books and (b) by posting the periodical totals within the impersonal accounts.

(2) It makes data out there concerning every explicit class of transactions.

(three) On the time of getting ready trial steadiness the checking is less complicated as a result of books being many, completely different individuals can perform the job.

Money E book

In any enterprise, maybe, the biggest variety of transactions of 1 nature should relate to money and financial institution. It’s so as a result of each transaction should, finally, end in a money transaction. Now if each money transaction is to be recorded in journal, it can contain an infinite quantity of labor in debiting or crediting money or checking account within the ledger for every transaction. Subsequently, it’s handy to have a separate e-book, the money e-book, to report such transactions. Sustaining of money e-book removes the need of getting money and financial institution accounts within the ledger. This e-book allows us to know the steadiness of money in hand and at financial institution at any level of time.

Money e-book consists of money and financial institution accounts taken out of ledger and maintained individually; thus it’s a substitute of ledger for money and financial institution accounts. It is usually a e-book of authentic entry as a result of money and financial institution transactions will not be recorded in every other subsidiary e-book.


Kinds of money books

The kind of money e-book for use by any enterprise will rely upon its nature and necessities. It might be anybody of the next:

(1) Single column money e-book (money column).

(2) Double column money e-book (money and low cost columns).

(three) Triple column money e-book (money, low cost and financial institution columns).

(four) Financial institution money e-book (financial institution and low cost columns).

Usually, every enterprise will use anybody of the above sorts of money e-book together with “petty cashbook” which is maintained on memorandum foundation.

Distinction between money A/c and Money e-book

Really money e-book is an ideal substitute of money account. In each, money transactions are recorded date clever so as of incidence. Money steadiness as on any date will be ascertained by balancing each on any day desired. But there are some variations between the 2 as given beneath:

Money account

1. Is an account within the ledger.

2. Money account is a part of the ledger. Money account is opened within the ledger during which posting is finished from some e-book of authentic entry i.e. journal

three. In money account posting just isn’t adopted by narration.

four. It solely data one side of transaction involving money and financial institution.

Money e-book

1. Is a separate e-book of accounts forming a part of accounting system.

2. Money e-book data entries immediately from transactions and these isn’t any want for a e-book of prime entry.

three. In money e-book entries are adopted by narration additionally.

four. It data each the facets of this transaction in money and financial institution columns to finish double entry posting.

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