Explanations to Various Columns of Purchase Book: Sales Book — In this subsidiary book all credit sales transaction are recorded, just like purchase book in sales book also only credit transaction related to goods are recorded while credit sale of assets is not recorded in the sales book.
The source document provide detail information for the preparation of the books. It also excludes the purchase of assets. The daily balance of purchase book is transferred to purchase ledger.
The accuracy of the records is also enhanced greatly for they play a large role in determining the financial health of individual company.
Amount Key Features of Subsidiary Books There is a difference between a purchase book and a purchase ledger. Is it commercial enough. In this document, all details about the date and amount of transaction, the name of the party whose account is credited along with reason for crediting his account shall be mentioned.
It could actually be okay. This saves time and many other resources. In practical life, there are large number of sellers and purchasers and there are numerous numbers of transactions among them for drawing, accepting and making the payment in respect of bills of exchange.
The format of purchases book is as under: Posting in the ledger from sales return book The following according are opened with the help of sales return book. This discount is given with a view of making early payment of debt. It provides us facility to divide the work among different departments like sale department, purchase department, cash department, bank department, etc.
Purchase Return Book — Purchase return book as the name suggests it records all transactions related to goods returned by the company to the seller from which the company has purchased goods. While preparing the books of account, purchase transaction is recorded only after deducting trade discount.
The first advantage is that it helps keep the records brief — it is impossible to manage every single transaction in the main ledger as it occurs. To avoid confusion, it must be printed in red.
Bills Receivable Book — It records all the bills receivable received by the company from the customers to whom the company has made credit sales. It cannot be recorded in the cash book as no cash flow is there and asset being not included in the terminology of goods; it cannot be recorded in the purchase book either.
This purchase book is prepared on the base of invoice of goods purchase. For example, purchase of computer by a business enterprise which is dealing in cloth shall not be treated as its goods and items related to computers shall be regarded as its assets.
Used to record all goods returned by business to the supplier -Sales Return Book: Where is the drama, the adventure.
Goods here mean the items or articles in which business enterprise is dealing with or we can say that goods are the items which are used by the business enterprise for regular sale.
CHAPTER - 6 SUBSIDIARY BOOKS I - SPECIAL PURPOSE BOOKS Learning Objectives After studying this Chapter, you will be able to: Ø understand the Meaning, Kinds and Advantages of Subsidiary Books Ø know the Purpose, Format, Posting and Balancing of.
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Bills Payable Book – is one of the subsidiary books that records all bills payable by a business, the total of bills payable book is posted on the credit side of the B/P account.
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