Chapter 5: SUBSIDIARY BOOKS

CHAPTER 5: SUBSIDIARY BOOKS

INTRODUCTION:
As the business expands the number of transactions becomes so large, that the Journal is
required to be sub-divided into Special Journals which are called Subsidiary Books

Meaning: The sub division of Journal on the basis of nature of transaction is known as
Subsidiary Books. These books are also called as Books of Original entries or Prime entries
because the transactions are first recorded in Subsidiary Books and then posted in the Ledger

Need for maintaining Subsidiary Books:

1. Specialisation:

Specialisation
2. Time saving and economical:
Elimination Time saving
of Repetitive and 3. Division of work:
work economical

Need for 4. Quick information and future reference:

Subsidiary Books

Internal Division of
check work 5. Internal check:
Quick
information
and future
6. Elimination of Repetitive work:
reference

TYPES OF SUBSIDIARY BOOKS ON THE BASIS OF TRANSACTION:

Cash/Bank
Credit Transactions Bill Transactions Others
Transactions

• Single Column • Purchase Book • Bills Receivable Book • Journal

• Double Column • Sales Book • Bills Payable Book
• Bank Book • Purchase Return
• Petty Cash Book • Saes Return

CASH BOOK
 All Cash and Bank transactions are recorded in the Cash Book.
 It has two sides where the left hand side is Receipt Side (Debit-side) and the right
hand side is Payment Side (Credit side).

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.1

 Chapter 5: SUBSIDIARY BOOKS

 Cash Book a Journal since it is a Book of Original entries and

 It also a ledger since it constitutes a classified record of all cash transactions in the
form of Ledger
 It helps in finding out Cash and Bank balance at the end of particular accounting period.
 Cash book serves dual purpose of journal as well as ledger

Format of Simple Cash Book:

In the books of _________
Dr. Simple Cash Book Cr.
Date Receipts Receipt L.F. Amount Date Payments Receipt L.F. Amount
No No

Two column Cash Book (Cash Book with Cash and Bank column):
Format of Cash Book with Cash and Bank columns:
In the books of --------------
Two column Cash Book
Date Receipts Receipt L.F. Cash Bank Date Payments Receipt L.F. Cash Bank
No No

PETTY CASH BOOK

 In large business organization the accounting work is divided systematically
 There are various departments spending small amount on stationary, postage and
telegram, refreshment carriage etc.
 The person maintaining petty cash book is known as petty cashier.
 The Petty cashier is given certain amount by the main cashier as an advance at the
beginning of every month from which all petty expenses are paid and recorded by petty
cashier.
 The term petty is derived from the French word "Petit" which means "small".
 So this book is maintained for recording small expenses which cannot be paid by cheque

Types of Petty Cash Book:

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.2

 Chapter 5: SUBSIDIARY BOOKS

• Divided into two sides Receipt side and Payment

• Cash or cheque received from head cashier is recorded in
receipt column
Simple petty cash
• Petty expenses paid are recorded in amount paid column
• Then, transactions to be posted in respective Expenses A/c
in Ledger

• Left hand side for recording receipt of cash

• Right hand side for recording payments
Analytical Columnar • has many sub columns on payment side for recording
Petty Cash Book various expenses
• For example : Printing and Stationery, Postage, Carriage and
Cartage etc.

Imprest system of Petty Cash Book:

 Maintaining Petty Cash Book under Imprest System is the best system.
 Estimate is made for petty expenses for a certain period.
 Such amount is paid to Petty cashier to start with.
 At the end of the period he presents the accounts of payment made by him to the
head cashier.
 After checking the account the petty cashier will be given a sum equal to the amount
actually spent by him.
 Now the Petty cashier will start with the same amount that he had at the beginning
of the previous period. The system is known as Imprest System of Petty Cash Book.

PURCHASE BOOK (BOUGHT DAY BOOK): (Purchase Journal)

 Goods purchased on credit are only recorded in purchase book.
 Cash purchases are not recorded in purchase book.
 Similarly credit purchases other than goods like purchase of office equipment, furniture,
stationary and building are not recorded in purchase book.
 For example, a business dealing in machinery spare parts will record only credit purchase
of machinery spare parts in purchase book.
 Goods purchased on credit are always recorded at net value.
Date Name of supplier Inward Invoice L.F. Amount
No.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.3

 Chapter 5: SUBSIDIARY BOOKS

PURCHASE RETURN BOOK

 Purchases return of goods are recorded.
 Sometimes goods purchased are returned to the supplier for various reasons such as the
goods are not of the required quality, or are defective.
 For every return, a debit note (in duplicate) is prepared the original one is sent to the
supplier for making necessary entries in his book.
 The supplier also prepare a note, which is called the credit note.
 It is also called as Purchase return Journal or Returns Outward Book.
Date Name of supplier Debit Note No. L.F. Amount

Debit Note: Debit Note is a statement containing the details of the goods like quantity, rate
etc. This note is prepared by the person who is returning the goods. It indicates that the
account of the person or party to whom the goods are returned is debited.
HM Enterprises
Senapati Bapat Road, Pune
Debit Note NO.: Date:
To,
We hereby inform you that we have debited your account with Rupees………………………………………….only
For the goods returned as under:
Qty. Particulars Invoice No. Rate (Rs.) Amount (Rs.)

Prepared By…………………………….. For HM Enterprises

Sign: Sign:

SALES BOOK
 Goods sold on credit are only recorded in Sales Book. (At Net Value)
 Cash sales are not recorded in Sales Book.
 Similarly goods assets news paper sold on credit are not recorded in Sales Book.
 E.g. A businessman dealing in furniture will recorded only credit sale of Furniture in
sales book.
 Cash sales of Furniture will not be recorded in sales book. It is also known as Sales
Journal
Date Name of Customer Outward Invoice L.F. Amount
No.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.4

 Chapter 5: SUBSIDIARY BOOKS

SALES RETURN BOOK (RETURN INWARD BOOK):

 When goods sold on credit are not according to specifications, sample or are damaged
in transit, buyer or debtor can return them to seller.
 Such return of goods sold on credit only is recorded in Sales Return Book.
 Return of goods sold for cash is not recorded in this book.
 It is also known as Sales Return Journal.
 On receipt of goods from the customer, a credit note is prepared.
 The difference between the credit and the debit note is that the former is prepared by
the seller and the later is prepared by the buyer
 Credit Note: Credit Note is a statement containing the details of the goods returned as
to quantity, rate etc. The credit note indicates that the account of the person to whom
the goods are returned is credited.
HM Enterprises
Senapati Bapat Road, Pune
Credit Note NO.: Date:
To,
We hereby inform you that we have Credited your account with Rupees………………………………………….only

For the goods returned as under:

Qty. Particulars Invoice No. Rate (Rs.) Amount (Rs.)

Prepared By…………………………….. For HM Enterprises

Sign: Sign:

JOURNAL PROPER (JOURNAL ENTRIES)

 To record the transactions which do not find place in Special Journal (Subsidiary Books)
 For example : Assets and other things except goods purchased on credit cannot be
recorded in Cash Book or in Purchase Book, but these type of transactions are recorded
in Journal Proper.
Following transactions are recorded in this Journal Proper:
1. Opening Entries: In the beginning of new accounting year record of the opening balances
of assets, liabilities and capital in the form of opening entries are made in Journal Proper.
2. Adjustment Entries: In order to update Ledger Account on accrual basis such entries are
made at the end of accounting period. Such as rent outstanding, prepaid insurance,
depreciation commission received in advance, etc.
3. Rectification Entries: To rectify errors in recording transactions in the books of original
entries and their posting to ledger account Journal Proper is used.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.5

 Chapter 5: SUBSIDIARY BOOKS

4. Transfer Entries: Drawings Account is transferred to Capital Account at the end of

accounting year. Expenses and Revenues which are not balanced at the time of balancing
are opened to record specific transactions. Accounts relating to operation of business such
as Sales, Purchases, Opening stock, Income, Gains and Expenses and Drawings are closed
at the end of accounting year and their total balances are transferred to Trading and Profit
and Loss Account by recording the Journal entries. These are also called closing entries

PRACTICALS
Que. 1
Record the following transactions in a Simple Cash Book of Mr. Harish for the month of
August 2011.
Aug 1 Started business with cash Rs. 50,000.
2 Opened a current account with bank and deposited Rs. 18,000.
4 Paid for transport Rs. 560.
7 Received dividend Rs. 4,000.
10 Invested in Government Bonds Rs. 5,000.
13 Sold goods for cash Rs. 6,000.
17 Paid life insurance premium of Mr. Harish Rs. 2,400.
20 Received on account from Pankaj Rs. 2,240.
22 Purchased goods for cash Rs. 6,000 @ 10% trade discount.
24 Paid electricity bill Rs. 1,500.
25 Purchased stationery for office use Rs. 2,460.
28 Paid telephone bill Rs. 2,000.
31 Deposited into bank cash in excess of Rs. 4,000.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.6

 Chapter 5: SUBSIDIARY BOOKS

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.7

 Chapter 5: SUBSIDIARY BOOKS

Que. 2
Enter the following transactions of HM Co., in a cash book with cash and bank column for
the month of July, 2012.
2012 Jul
1 Cash Balance Rs. 23,000, Bank Balance Rs. 14,000.
3 Received from Rajeshri cash Rs. 2,750 and a bearer cheque for Rs. 510, deposited
in the Bank.
6 Cash sales Rs. 7,650 and discount allowed Rs. 50.
8 Paid to Varun Rs. 5,200 by cheque and discount received Rs. 125.
12 Deposited into bank Rs. 5,000.
15 Cheque received from Rajeshri returned dishonoured.
18 Purchased goods from Paresh Rs. 4,000 at 8% trade discount and paid half the
ammount immediately.
20 Aasha stores directly deposited into our bank Rs. 9,500.
25 Paid salaries by cheque Rs. 5,000.
31 Deposited into bank all cash in excess of Rs. 3,000.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.8

 Chapter 5: SUBSIDIARY BOOKS

Que. 3
Enter the following transactions in a Simple Petty Cash Book.
2012
Jan 1 Received a cheque of Rs. 150 for Petty expenses.
6 Bought postage stamps Rs. 10.
9 Paid for Stationery Rs. 8.
10 Sent a telegram Rs. 6.
11 Paid tiffin charges for customers Rs. 13.
14 Paid for cartage Rs. 6.
17 Balance due to Tanu paid Rs. 5.
19 Paid conveyance of the salesman Rs. 17.
25 Paid coolie Rs. 10.
29 Purchased paper clips Rs. 6.
31 Paid electricity charges Rs. 19.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.9

 Chapter 5: SUBSIDIARY BOOKS

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.10

 Chapter 5: SUBSIDIARY BOOKS

Que. 4
Enter the following transactions in an Analytical Petty Cash Book under Imprest system for
the month of April, 2012. Imprest money was maintained at Rs. 1,500.
1 Cash Balance Rs. 150.
2 Gave gift to clerk Tini Rs. 101.
3 Paid Anand Printers for Printing bill book Rs. 110.
7 Washing Charges paid to Peon Rs. 15.
11 Purchased Office files for Rs. 95.
14 Paid lunch bill for traveling Salesman Rs. 73.
19 Paid for repairs of Machinery Rs. 110.
25 Paid for Cartage Rs. 50.
28 Sent Telegram to Head Office Rs. 45.
30 Paid Bus Fare Rs. 25.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.11

 Chapter 5: SUBSIDIARY BOOKS

Que. 5
Enter the following transaction in Purchase Book, Sales Book, Return Outward Book and
Return Inward Book of Balaji General Stores for the month of April 2012.
Apr 1 Ankit invoiced goods of Rs. 8,000 @ 10% trade discount as per invoice number 422.
3 Purchased computer from Turbo computers of Rs. 25,000 as per their invoice number
885.
4 Invoiced goods to Dipen Rs. 10,000 @ 2.5% trade discount as per invoice number
152.
7 Sold goods to Sanju Rs. 2,500 @ 5% trade discount as per invoice number 153.
12 Dipen returned goods of Rs. 1,500 (Gross) for which we issued credit note number
89.
15 Goods of Rs. 1,500 returned to Ankit and issued debit note number 50.
18 Sold a part of old machinery to Viren on credit for Rs. 9,500.
20 Sold goods of Rs. 6,650 to Shantanu as per invoice number 154 and purchased goods
from him Rs. 2,250 as per his invoice number 574.
24 Raju supplied goods to us of Rs. 1,500 as invoice number Rs. 856.
27 Munshi Traders returned goods of Rs. 550 (Net) and issued a credit note number
85.
29 Returned goods of Rs. 520 to Raju and issued debit note number 51.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.12

 Chapter 5: SUBSIDIARY BOOKS

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.13

 Chapter 5: SUBSIDIARY BOOKS

Que. 6
Enter the following transaction in the Bank Book of Mr. Mukesh for the month of June
2012.
1 Bank Balance: Bank of India Rs. 25,000; Bank of Maharashtra Rs. 14,000; SBI
(Credit balance) Rs. 8,000.
2 Issued a cheque drawn on Bank of Maharashtra to Sonal Rs. 1,500 in full settlement
of her account Rs. 1,550.
3 Received cheque from Foram Rs. 2,800 and deposited the same into Bank of
Maharashtra.
6 Withdrew for office from Bank of India Rs. 4,000.
8 Interest on overdraft charged by SBI Rs. 275.
11 Withdrew from Bank of Maharashatra for personal use Rs. 1,200.
13 Deposited into SBI Rs. 9,000.
15 Purchased goods of Rs. 6,000 and issued a cheque drawn on Bank of India.
17 Introduced additional Capital Rs. 14,000 and deposited it into Bank of Maharashtra.
20 Direct deposit made by Monal into SBI Rs. 4,825 in settlement of Rs. 5,000.
22 Sold investments Rs. 8,500 and depostied the cheque into SBI.
28 Bank of Maharashtra paid our Electricity bill as per our standing instruction Rs.
2,000.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.14

 Chapter 5: SUBSIDIARY BOOKS

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.15

 Chapter 5: SUBSIDIARY BOOKS

Que. 7*
From the following prepare Purchase Return Book 20 Aug 2018 - Goods returns to Seema
Electronics is as follows 2 Mini T. V. sets @ Rs.2,000 each and a Home Theatre @ 4,500
each return against Debit Note No. 4/2018.

Que. 8*
Enter the following transaction of M/s. Kirti in Purchase book, Sales book, Purchase Return
book, Sales Return Book. For the month of March
1 Sold goods to Sudhakar Stores Rs. 39,000 @ 10% T.D.
3Purchased goods from Avadhoot Traders Rs. 47,350 & paid carriage Rs. 250
6 Sudhakar Stores returned goods of Rs. 3,220 (Net)
10 Cash purchases Rs. 18,600 & cash sales Rs. 16,000
13 Rakesh invoiced goods to us as per our order placed on 28th Feb. 2018 Rs. 37,000
17 Sold goods Rs. 33,400 to Ragini @ 10% T.D.
20 Returned goods to Rakesh Rs. 3,850 as they were defective
22 Credit purchases from M/s. Michel Traders Rs. 19,450 & they allowed a TD Rs. 150
23 Ragini return goods Rs. 1900 (Gross) as they were damaged.
26 Purchased Office Furniture on credit from Sharma Furniture Mart Rs. 55,000
29 Purchased goods from Garima Stores Rs. 8,000 & sold the same to Sunita @ 25% profit
on cost.
31 Sent a Debit Note to Michel Traders Rs. 3,200

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.16

 Chapter 5: SUBSIDIARY BOOKS

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.17

 Chapter 5: SUBSIDIARY BOOKS

Objective Type Questions

1. Answer in one sentence only: [1 mark each]
*1. What is Subsidiary Book?
Ans: Subsidiary books refer to sub division of journals. It helps in maintaining specific types
of transactions which are large in number and repetitive in nature.
2. Why Subsidiary books are also known as books of prime entry or original entry?
Ans: Subsidiary books are also known as books of prime entry or original entry because when
a particular transaction occurs it is first recorded in one' of these books and subsequently
posted to the respective accounts in the ledger.
*3. What is Cash Book?
Ans: Cash book is a sequential or chronological record of all cash transactions.
4. How does Cash book serve the dual objective of journal as well as ledger?
Ans: Since all cash transactions are recorded in chronological order, cash book acts as a
journal and since it creates a classified record of all cash transactions in the form of ledger
with brief narrations and helps in arriving at the cash balance at the close of specific
accounting period, it acts as a ledger.
5. What is included in the receipt side column in simple cash book?
Ans: Receipt Side includes entries for cash, bearer cheques and drafts received.
6. What is Overdraft?
Ans: Banks allow withdrawals of amounts in excess of the amount of deposit to its current
accountholders. This facility is known as overdraft facility.
7. What is Pay in slip book?
Ans: Pay-in Slip is a slip through which a person can deposit cash or cheque in a bank
account.
*8. State the meaning of Pass Book.
Ans: A Pass book is an extract of the depositors account in the books of the bank which
provides information on the amount of cash or cheques deposited or withdrawn from the
account and shows the remaining balance of the account.
9. Define cheque.
Ans: A cheque is a written unconditional order drawn on particular bank, signed by the
account holder directing bank to pay on demand a certain sum of money to the person
named therein or to the bearer.
*10. Who is a Payee?
Ans: The payee is the person to whom the amount of cheque is made payable or in whose
favour the cheque is drawn.
*11. When is the withdrawal slip used?

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.18

 Chapter 5: SUBSIDIARY BOOKS

Ans: A withdrawal slip is used for withdrawal of cash from the bank account.
*12. What do you mean by Crossed Cheque?
Ans: When two parallel lines are drawn on the face of a cheque, it is known as crossed
cheque. The bank does
not pay cash against crossed cheque. It can only credit the amount to the bank account of
the payee.
*13. Give the meaning of dishonour of cheque.
Ans: A cheque is said to be dishonoured when the bank refuses to pay the amount to the
payee due to certain reasons.
*14. State the meaning of Contra Entry.
Ans: Entries recorded on both the sides of the Cash Book are called "Contra Entries". Contra
Entries are passed when Cash Account and Bank Account are affected at the same time in a
transaction.
15. What is Petty Cash Book?
Ans: Petty cash book is a separate cash book maintained to record all the small expenses
which are repetitive in nature and cannot be paid by cheque.
*16. Write the meaning of imprest system of Petty Cash Book.
Ans: Imprest system is a system where the main cashier estimates the total petty expenses
for a specific period and based on the estimate, an amount is given to the petty cashier for
the payment of petty expenses for a particular period.
*17. State the source document required for recording transactions in Sales Book?
Ans: Outward Invoice or credit memo or bill are the source documents required for recording
transactions in the Sales Book.
*18. State the source document required for recording transactions in Purchase Return
Book.
Ans: Debit Note is the source document required for recording transactions in Purchase
Returns Book.
*19. State the source document required for recording transactions in Sales Return Book.
Ans: Credit note is the source document used for recording the transactions in the Sales
Returns Book.
*20. Give the meaning of Bank Book.
Ans: A Bank book is a cash book with bank columns only. It is a separate book in which
only banking transactions entered into with various banks, are recorded.
*21. Write the meaning of Journal Proper.
Ans: A subsidiary book which is used by busineessman to record all those transactions which
cannot be recorded in any other book is called as Journal Proper.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.19

 Chapter 5: SUBSIDIARY BOOKS

*22. What is the meaning of Closing entry?

Ans: Closing entry is the entry passed at the time of preparing final accounts for
transferring all the income and expense accounts to the Trading and Profit & Loss account
for ascertaining the profit / loss at the end of the accounting period.

11. Write the word/ term/ phrase which can substitute each of the following
statements: [1 mark each]
*1. A bank account which the businessman prefers to open.
*2. Excess of bank withdrawal over bank deposits.
3. Short Term Loan facility given by bank to current account holders.
*4. Document used for depositing cash or cheque into the bank.
*5. An extract of customer's account maintained by bank.
*6. Bank on whom a cheque is drawn.
*7. A type of cheque where the holder is paid the amount across the counter of the bank.
*8. Signing on the back of the cheque to transfer its ownership.
9. Entry passed when cash account and bank account are affected simultaneously in a
transaction
*10. Person who maintains Petty Cash Book.
*11. Petty cash book in which the payment side is ruled in suitable columns.
12. Speed and registered post, inland covers etc. are included under which expense head?
13. This system minimizes the risk of fraud and brings accuracy as it is frequently
checked along with documentary evidence
*14. Subsidiary book in which only credit purchase of goods is recorded.
*15. A note issued by buyer to seller giving full details of goods returned.
*16. Note issued by seller on receipt of defective goods from customer.
*17. Subsidiary book in which return of goods sold on credit is recorded.
18. The book which is also known as Return Inwards Book.
19. Book maintained by businessmen in which only banking transactions with various
banks are recorded.
*20. Book in which cash discount received and allowed is recorded.
21. The book which records those transactions, which cannot be recorded in any particular
book *22. Accounting entries passed in journal proper for correction of mistakes committed in
the books of accounts.
Ans: 1. Current Account 2. Overdraft
3. Overdraft 4. Pay-in slip
5. Pass book 6. Drawee

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.20

 Chapter 5: SUBSIDIARY BOOKS

7. Bearer Cheque 8. Endorsement

9. Contra entries 10. Petty Cashier
11. Analytical Petty Cash Book 12. Postage and telegrams
13. Imprest system 14. Purchase Book
15. Debit Note 16. Credit Note
17. Sales Returns Book 18. Sales return book
19. Bank Book 20. Journal Proper
21. Journal Book 22. Rectification entries

III. Select the most appropriate alternative from those given below and rewrite the
statements: [1 mark each]
*1. Sub-division of journal is known as ............... book.
(A) subsidiary (B) purchase returns (C) purchase (D) journal proper
2. In ............... book only cash receipts and cash payment are recorded.
(A) Sales (B) Purchase (C) Cash (D) Purchase return
*3. Additional cash introduced in business is recorded in ............... .
(A) purchase book (B) cash book (C) journal proper (D) returns inwards
book
*4. Cash columns of cash book can never have ............... balance.
(A) credit (B) debit (C) zero (D) none of the
above
5. Bank columns appearing in two columns cash book represent bank ............... account.
(A) Fixed (B) Current (C) Recurring (D) Saving
6. Under ............... account, the depositor can deposit and withdraw amount any number
of times.
(A) Fixed (B) Current (C) Recurring (D) Saving
*7. A fixed amount is deposited for a fixed period in ............... deposit account.
(A) current (B) savings (C) fixed (D) recurring
8. Under ............... account the amount can be drawn only after the expiry of the fixed
period.
(A) Fixed (B) Current (C) Recurring (D) Saving
9. ............... is also called as Deposit Slip.
(A) Pay in slip (B) Passbook (C) Cheque Book (D) Cashbook
*10. The person who draws the cheque and sign on it is the ............... .
(A) drawer (B) drawee (C) payee (D) all of the above
11. The bank on whom the cheque is drawn is known as ............... .

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.21

 Chapter 5: SUBSIDIARY BOOKS

(A) Drawee (B) Drawer (C) Payee (D) Account holder

12. Cheque received has to be presented to the bank for payment within ............... months
from the date of
drawing.
(A) 2 (B) 3 (C) 1.5 (D) 4
*13. Direct deposit made by customer into our bank is recorded on the ............... side of the
cash book.
(A) payment (B) credit (C) receipt (D) both
*14. An entry recorded on both sides of cash book is known as ............... entry.
(A) opening (B) rectifying (C) transfer (D) contra
15. Washing and cleaning charges comes under ............... expense head.
(A) Carriage (B) Printing and Stationery
(C) Sundry (D) Postage and Telegrams
*16. The source document for recording in purchase book is ............... .
(A) Inward invoice (B) Outward invoice (C) voucher (D) cash memo
*17. Credit purchase of machinery is recorded in the ............... .
(A) purchase book (B) cash book (C) journal proper (D) returns outward
book
*18. Entry for bad debts is recorded in the ............... .
(A) sales book (B) purchase book (C) cash book (D) journal proper

IV. State whether the following statements are TRUE or FALSE: [1 mark each]
1. Subsidiary books result in specialization and increases the efficiency of clerks.
*2. Cash book is a book of original entry.
*3. A cash book is both a journal as well as ledger.
*4. Credit transactions are never recorded in cash book.
5. Simple cash book is most suitable for small traders which operate business on small
scale.
*6. Businessman generally operates savings bank account.
*7. Cheque book facility is available for fixed deposit account.
8. Drawer is a person in whose favour the cheque is drawn.
9 Order Cheque is safer than the bearer cheque.
*10. It is not necessary to record dishonour of cheques in the cash book.
*11. Endorsed cheques are always recorded on the payment side in the bank column.
*12. A person who endorses the cheque is known as endorser.
*13. Interest on overdraft charged by bank is recorded in the cash column.

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.22

 Chapter 5: SUBSIDIARY BOOKS

*14. Cheque received and deposited into bank on the same day is a contra entry.
*15. Total of payments side can be greater than total of receipts side in case of bank
column.
*16. Simple petty cash book is not very popular.
17. Analytical Petty cash book exercises effective control over cash balance and cash
payments.
18 Purchase book records cash purchases.
*19. Purchase of asset or stationery on credit is recorded in purchase book.
*20. When goods are returned by buyer to seller, buyer sends a debit note.
21 Credit note is the document that supports the recording of transactions in purchase
return book.
*22. Cash discount allowed is recorded on the debit side of cash book.
Answers:
1. True 2. True 3. True 4. True
5. True 6. False 7. False 8. False
9. True 10. False 11. False 12. True
13. False 14. False 15. True 16. True
17. True 18. False 19. False 20. True
21. False 22. False

CA CS HARISH A MATHARIYA 98220 93220 | For video lectures: OnlyLectures.com 5.23