unit-3-cash-book-and-bank-reconciliation

Unit-3 Cash Book And Bank Reconciliation

In this unit you will learn about the most important subsidiary book called Cash Book.

Why is journal sub-divided? Name the special journals generally maintained by the business and state the type of transactions entered in each of them?

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Learning Pundits Content Team

Written on Apr 16, 2019 1:06:10 PM

It is practically impossible to record all transactions in one book of prime entry. Hence, the journal is sub-divided into a number of subsidiary books. These are also called special journals. The sub-division is done in such a way that a separate book is used for each type of transactions which are repetitive in nature and are sufficiently large in number, In any large business the subsidiary books generally used are as follows :

  1. Cash Book: It is used for recording all cash receipts and cash payments including cash purchases and cash sales.
  2. Purchases Journal: It is used for recording all credit purchases of goods.
  3. Sales Journal: It is used for recording all credit sale of goods.
  4. Purchases Returns Journal: It is used for recording the returns of goods to suppliers. It is also known as 'Returns Outwards Book'.
  5. Sales Returns Journal: It is used for recording the returns of goods by customers. It is also known as 'Returns Inwards Book’.
  6. Bills Receivable Journal: This book is meant for recording transactions relating to bills of exchange and promissory notes received from debtors.
  7. Bills Payable Journal: This book is meant for recording bills of exchange and promissory notes accepted by the business in favor of creditors.
  8. Journal Proper: In this book only such transactions are recorded which are not covered, by any of the above named subsidiary books, for example, credit purchases of fixed assets, opening entry, rectification entries, etc.


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