Accounting

Accounting Sub Journals And Money Book

The accounting process, for recording facts, includes two actions, namely journalizing and posting. It follows that each enterprise will have to retain a journal (books of original or prime entry) and a ledger (principal book). Therefore the method of book-maintaining initially envisages that all the transactions will have to be recorded initially in the book of original record, i.e., journal and then each and every transaction so recorded in the journal ought to be posted in the principal book, i.e., ledger. Subsequently it was skilled that the labor of recording each and every transaction with narration in the journal and then posting each and every entry in two various accounts in the ledger was huge. The process was extra time-consuming and resulted in greater establishment price.

It is but organic that in each enterprise most of the transactions relate to receipts and payments of money purchases of goods . sales of goods and so on. It was identified to be handy and economical to retain separate books to record each and every certain class of transactions. Every single separate book meant to record transactions of a certain class is the book of original or prime entry. It is also recognized as sub-journal or subsidiary book. The method beneath which transactions of comparable nature are entered in the relevant’ subsidiary book and on the basis of which ledger is written is recognized as the ‘practical method of book- keeping’. This method reduces labor and time of recording the transactions as impersonal accounts, viz., sales account, purchases account and so on., obtain the posting of totals and not of person transactions. Nonetheless, this method also conforms to the simple guidelines of the double entry method.

Frequently the following subsidiary books are employed in the enterprise:

(1) Money book : records receipts and payments of money which includes transactions relating to bank

(two) Purchases book: records credit purchases of goods meant for sale or for conversion into completed goods

(three) Returns outwards book: records return of the goods to the suppliers due to many motives

(four) Sales book: records credit sales of the goods dealt in by the enterprise

(five) Returns inwards book : records the return of goods by the shoppers to the enterprise (vi) Bills receivable book: records the receipts of bills of exchange, promissory notes and hundies of several parties

(six) Bills payable book: records the concern of bills exchange, promissory notes and hundies to the several parties:

Positive aspects of sub-journals

(1) It final results in saving of time by (a) enabling the recording process to be carried on simultaneously in various subsidiary books and (b) by posting the periodical totals in the impersonal accounts.

(two) It tends to make facts offered with regards to each and every certain class of transactions.

(three) At the time of preparing trial balance the checking is simpler simply because books becoming lots of, various persons can carry out the job.

Money Book

In any enterprise, probably, the biggest quantity of transactions of one particular nature will have to relate to money and bank. It is so simply because each transaction will have to, in the end, outcome in a money transaction. Now if each money transaction is to be recorded in journal, it will involve an huge quantity of labor in debiting or crediting money or bank account in the ledger for each and every transaction. For that reason, it is handy to have a separate book, the money book, to record such transactions. Keeping of money book removes the necessity of possessing money and bank accounts in the ledger. This book enables us to know the balance of money in hand and at bank at any point of time.

Money book consists of money and bank accounts taken out of ledger and maintained separately hence it is a substitute of ledger for money and bank accounts. It is also a book of original entry simply because money and bank transactions are not recorded in any other subsidiary book.

Forms of money books

The form of money book to be employed by any enterprise will rely upon its nature and specifications. It may well be any one of the following:

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

(two) Double column money book (money and discount columns).

(three) Triple column money book (money, discount and bank columns).

(four) Bank money book (bank and discount columns).

Frequently, each and every enterprise will use any one of the above forms of money book along with “petty cashbook” which is maintained on memorandum basis.

Distinction in between money A/c and Money book

Really money book is a fantastic substitute of money account. In each, money transactions are recorded date smart in order of occurrence. Money balance as on any date can be ascertained by balancing each on any day preferred. However there are some variations in between the two as provided beneath:

Money account

1. Is an account in the ledger.

two. Money account is element of the ledger. Money account is opened in the ledger in which posting is carried out from some book of original entry i.e. journal

three. In money account posting is not followed by narration.

four. It only records one particular aspect of transaction involving money and bank.

Money book

1. Is a separate book of accounts forming element of accounting method.

two. Money book records entries straight from transactions and these is no require for a book of prime entry.

three. In money book entries are followed by narration also.

four. It records each the elements of this transaction in money and bank columns to total double entry posting.

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