After going through this lesson you will be able to understand the meaning of Subsidiary Books.
Meaning of Subsidiary Books
The accounting process starts with the identification of transactions of financial and non-financial nature. All financial transactions are first recorded in Journal. This is known as Books of Original Entry. A small business has a lesser number of transactions and therefore, it is possible to record all business transactions in one book i.e. Journal.
However, when business grows, the number of business transactions also increases. It is a very time-consuming, difficult, and tedious task for a firm to record such voluminous transactions and events in one single book. Thus, in order to save time and effort, it is advisable to subdivide the Journal into Subsidiary Books to record the transactions of similar nature in a separate book.
These sub-divided Journals are popularly known as Subsidiary Books. These books are also termed as Special Purpose Books or Special Journals or Books of Original/Primary/Prime Entry. Sub-division of Journal provides scope for division of work which leads to the improvement in efficiency and effectiveness.
In other words, subsidiary books provide ease and convenience to record transactions of similar nature in a separate book. Journal entry is not required for the transactions which are entered in these books.
Also, Read Ledger in Accounting?