Question

What are the advantages of subsidiary books?

Answer 1

The advantages of maintaining subsidiary books are:

1. Proper and systematic record of business transactions: All the business transactions are classified and grouped conveniently as cash and non-cash transactions, which are further classified as credit purchases, credit sales, returns, etc. As separate books are used for each type of transaction, individual transactions are properly and systematically recorded in the subsidiary books.
2. Convenient posting: All the transactions of a particular nature are recorded at one place, i.e., in one of the subsidiary books. For example, all credit purchases of goods are recorded in the purchases book and all credit sales of goods are recorded in the sales book. It facilitates posting to purchases account, sales account, and concerning personal accounts.
3. Division of work: As the journal is sub-divided, the work will be subdivided and different persons can work on different books at the same time and the work can be speedily completed.
4. Efficiency: The sub-division of work gives the advantage of specialization. When the same work is done by a person repeatedly the person becomes efficient in handling it. Thus, specialization leads to efficiency in accounting work.

5. Helpful in decision making: Subsidiary books provide complete details about every type of transaction separately. Hence, the management can use the information as the basis for deciding its future actions. For example, information regarding sales returns from the sales returns book will enable the management to analyze the causes for sales returns and to adopt effective measures to remove deficiencies.

6. Prevents errors and frauds: Internal check becomes more effective as the work can be divided in such a manner that the work of one person is automatically checked by another person. With the use of internal checks, the possibility of the occurrence of errors or fraud may be avoided or minimized.
7. Availability of requisite information at a glance: When all transactions are entered in one journal, it is difficult to locate information about a particular item. When subsidiary books are maintained, details about a particular type of transaction can be obtained from subsidiary books. The maintenance of subsidiary books helps in obtaining the necessary information at a glance.

8. Detailed information available: As all transactions relating to a particular item are entered in a subsidiary book, it gives detailed information. It is easy to arrive at monthly or quarterly totals.

9. Saving in time: As there are many subsidiary books, the work of entering can be done simultaneously by many persons. Thus, it saves time and accounting work can be completed quickly.

10. Labour of posting is reduced: Labour of posting is reduced as posting is made in periodical totals to the impersonal account, for example, the Purchases account.