Subsidiary Books/ Book of first entry

What is books of first entry ?

• Are books in which information from the source documents is recorded every day. Books of first entry are also called the journal of a business.

You know that each transaction in a business has a source document linking to it. We use source document to record the transaction in the books of first entry. 

We will learn eight(8) books of first entry, which are:

1. The cash book : we record cash and bank transactions 
2. Petty cash book : we record small cash payments 
3. Debtors journal : we record Credit sales 
4. Creditors journal : we record credit purchases 
5. Debtors returned journal : we record sales returns 
6. Creditors returned journal: we record purchases returns 
7. Wages journal: we record payroll information 
8. General journal: we record transactions that do not fit in other books of first entry 

Advantages of books of first entry 

The books of first entry are beneficial to the business because:

• They help summarise and group business' transactions of similar characteristics together.
• It becomes easier to immediately obtain specific accounting records such as cash and bank balances, total credit sales and total credit purchases from the book of first entry.
• Saving Labour Hours: Recording in a subsidiary book saves a lot of time and clerical hours. Firstly there is no need to journalize and/or give narrations for every transaction. This helps reduce the time it takes to completely record a transaction. Also since we use a number of subsidiary books, various accounting process can be undertaken simultaneously. This will save the time of the clerks/accountants.

Uses of books of first entry in the accounting process 

• Reduce the number of entries in the ledgers.
• Act as a guide for posting to the ledger 
• Source of information for control accounts

https://youtu.be/_R2rNQBs0rk?si=gQ4ND4vw9qdqFRLC

Answer this question in the comments section 

Question: Do we completely eliminate journalizing when we record transactions in a subsidiary book? 

True/ false ( choose the correct answer)

Good luck!😊