Special Purpose
Subsidiary Books
Master all six special purpose books — Purchase Book, Sales Book, Purchase Return Book, Sales Return Book, Bills Receivable Book, and Bills Payable Book. These books simplify bookkeeping by recording only one type of transaction each. High-scoring practical chapter for CBSE and CUET.
6Books
20MCQs
20Quiz Qs
FreeAlways
📌 Why Subsidiary Books?
One Journal Cannot Handle Everything Efficiently
When a business grows, recording every transaction in one Journal becomes slow and error-prone. Subsidiary Books (also called Special Purpose Books) solve this by dedicating one book to one type of transaction. This allows multiple clerks to work simultaneously and makes Ledger posting faster and more accurate.
1. Meaning of Subsidiary Books
Subsidiary Books are special purpose books of original entry in which only one specific type of transaction is recorded. They are a subdivision of the Journal. Together with the Cash Book, they form the complete set of books of original entry for a business.
Key point: Transactions recorded in subsidiary books are NOT recorded again in the Journal. The subsidiary book itself serves as the book of original entry for those transactions. Only transactions that do not fit in any subsidiary book go to the Journal Proper (Residual Journal).
2. Types of Special Purpose Subsidiary Books
1
Purchase Book
Records all credit purchases of goods only. Cash purchases and credit purchases of assets go to Journal/Cash Book.
2
Sales Book
Records all credit sales of goods only. Cash sales and credit sales of assets go to Journal/Cash Book.
3
Purchase Return Book
Records goods returned to suppliers (creditors). Also called Returns Outward Book.
4
Sales Return Book
Records goods returned by customers (debtors). Also called Returns Inward Book.
5
Bills Receivable Book
Records all Bills of Exchange received from debtors. These are assets — money to be received.
6
Bills Payable Book
Records all Bills of Exchange accepted (payable to creditors). These are liabilities — money to be paid.
3. Purchase Book — Format and Posting
Records only credit purchases of goods dealt in by the business. Each entry is made from the supplier's invoice. At month-end, the total is posted to the Dr. side of Purchases A/c in the Ledger. Individual creditors are credited in their respective Ledger accounts.
What goes in Purchase Book: Credit purchase of goods — YES | Cash purchase — NO (Cash Book) | Credit purchase of furniture/machinery — NO (Journal Proper) | Purchase returns — NO (Purchase Return Book)
📈 Purchase Book — M/s Sharma Traders, April 2026
| Purchase Book | |||||
| Date | Name of Supplier (Creditor) | Invoice No. | L.F. | Details (₹) | Amount (₹) |
|---|---|---|---|---|---|
| Apr 2 | Ramesh & Co., Delhi 100 units @ ₹500 = ₹50,000 less Trade Disc. 10% | 101 | 45,000 | ||
| Apr 8 | Suresh Traders, Mumbai 50 units @ ₹800 = ₹40,000 less Trade Disc. 5% | 205 | 38,000 | ||
| Apr 15 | Priya Enterprises, Kolkata 200 units @ ₹200 = ₹40,000 less Trade Disc. 0% | 310 | 40,000 | ||
| Apr 22 | Mohan Bros., Chennai 80 units @ ₹300 = ₹24,000 less Trade Disc. 8.33% | 418 | 22,000 | ||
| Total → Purchases A/c Dr. | 1,45,000 | ||||
Ledger posting: Monthly total ₹1,45,000 → Purchases A/c Dr. ₹1,45,000 (one single posting). Each supplier credited individually: Ramesh & Co. Cr. ₹45,000; Suresh Traders Cr. ₹38,000; Priya Enterprises Cr. ₹40,000; Mohan Bros. Cr. ₹22,000. Trade discount is deducted before recording — never shown separately.
4. Sales Book — Format and Posting
Records only credit sales of goods dealt in by the business. Each entry is made from the sales invoice issued to the customer. Monthly total posted to Cr. side of Sales A/c. Individual debtors are debited in their Ledger accounts.
What goes in Sales Book: Credit sale of goods — YES | Cash sale — NO (Cash Book) | Credit sale of old furniture/machinery — NO (Journal Proper) | Sales returns — NO (Sales Return Book)
📈 Sales Book — M/s Sharma Traders, April 2026
| Sales Book | |||||
| Date | Name of Customer (Debtor) | Invoice No. | L.F. | Details (₹) | Amount (₹) |
|---|---|---|---|---|---|
| Apr 3 | Anil Kumar, Agra 60 units @ ₹700 = ₹42,000 less Trade Disc. 5% | S-01 | 39,900 | ||
| Apr 10 | Geeta Stores, Jaipur 120 units @ ₹600 = ₹72,000 less Trade Disc. 10% | S-02 | 64,800 | ||
| Apr 18 | Vinod & Sons, Lucknow 40 units @ ₹900 = ₹36,000 less Trade Disc. 0% | S-03 | 36,000 | ||
| Apr 25 | Rita Traders, Pune 90 units @ ₹500 = ₹45,000 less Trade Disc. 4% | S-04 | 43,200 | ||
| Total → Sales A/c Cr. | 1,83,900 | ||||
Ledger posting: Monthly total ₹1,83,900 → Sales A/c Cr. ₹1,83,900. Each debtor debited individually: Anil Kumar Dr. ₹39,900; Geeta Stores Dr. ₹64,800; Vinod & Sons Dr. ₹36,000; Rita Traders Dr. ₹43,200.
5. Purchase Return Book — Format and Posting
Also called Returns Outward Book. Records goods returned to suppliers. Entry is made from a Debit Note issued to the supplier (we debit the supplier's account because we owe him less now). Monthly total posted to Cr. side of Purchase Returns A/c in Ledger. Suppliers are debited individually.
Debit Note: We issue a Debit Note to the supplier when we return goods. It means we are debiting the supplier's account in our books (reducing what we owe). The supplier issues a Credit Note in response.
📈 Purchase Return Book — M/s Sharma Traders, April 2026
| Purchase Return Book (Returns Outward Book) | |||||
| Date | Name of Supplier | Debit Note No. | L.F. | Details (₹) | Amount (₹) |
|---|---|---|---|---|---|
| Apr 5 | Ramesh & Co., Delhi 10 units returned @ ₹500 less 10% = ₹450 each | DN-01 | 4,500 | ||
| Apr 20 | Suresh Traders, Mumbai 5 units returned @ ₹800 less 5% = ₹760 each | DN-02 | 3,800 | ||
| Total → Purchase Returns A/c Cr. | 8,300 | ||||
Ledger posting: Total ₹8,300 → Purchase Returns A/c Cr. ₹8,300. Suppliers debited: Ramesh & Co. Dr. ₹4,500; Suresh Traders Dr. ₹3,800 (reducing what we owe them).
6. Sales Return Book — Format and Posting
Also called Returns Inward Book. Records goods returned by customers. Entry is made from a Credit Note issued to the customer (we credit the customer's account because he owes us less now). Monthly total posted to Dr. side of Sales Returns A/c. Debtors are credited individually.
Credit Note: We issue a Credit Note to the customer when we accept returned goods. It means we are crediting the debtor's account in our books (reducing what he owes us). The customer records a Debit Note in response.
📈 Sales Return Book — M/s Sharma Traders, April 2026
| Sales Return Book (Returns Inward Book) | |||||
| Date | Name of Customer | Credit Note No. | L.F. | Details (₹) | Amount (₹) |
|---|---|---|---|---|---|
| Apr 12 | Anil Kumar, Agra 6 units returned @ ₹700 less 5% = ₹665 each | CN-01 | 3,990 | ||
| Apr 28 | Geeta Stores, Jaipur 10 units returned @ ₹600 less 10% = ₹540 each | CN-02 | 5,400 | ||
| Total → Sales Returns A/c Dr. | 9,390 | ||||
Ledger posting: Total ₹9,390 → Sales Returns A/c Dr. ₹9,390. Customers credited: Anil Kumar Cr. ₹3,990; Geeta Stores Cr. ₹5,400 (reducing what they owe us).
7. Bills Receivable Book — Format and Posting
Records all Bills of Exchange received from debtors. A Bill Receivable is an asset — a written promise by the debtor to pay a fixed amount on a future date. At month-end, the total is posted to Dr. side of Bills Receivable A/c. Individual debtors are credited.
📈 Bills Receivable Book — M/s Sharma Traders, April 2026
| Bills Receivable Book | |||||||
| Date | From Whom Received | Drawee | Due Date | Where Payable | L.F. | Term | Amount (₹) |
|---|---|---|---|---|---|---|---|
| Apr 5 | Anil Kumar | Anil Kumar | Jul 8 | SBI, Agra | 3 months | 15,000 | |
| Apr 14 | Geeta Stores | Geeta Stores | Jul 17 | PNB, Jaipur | 3 months | 20,000 | |
| Apr 22 | Vinod & Sons | Vinod & Sons | Jun 22 | BOB, Lucknow | 2 months | 12,000 | |
| Total → Bills Receivable A/c Dr. | 47,000 | ||||||
Ledger posting: Total ₹47,000 → Bills Receivable A/c Dr. ₹47,000 (asset increases). Debtors credited: Anil Kumar Cr. ₹15,000; Geeta Stores Cr. ₹20,000; Vinod & Sons Cr. ₹12,000 (their debt converted to bill).
8. Bills Payable Book — Format and Posting
Records all Bills of Exchange accepted by the business (payable to creditors). A Bill Payable is a liability — a written promise to pay a creditor on a future date. Monthly total posted to Cr. side of Bills Payable A/c. Individual creditors are debited.
📈 Bills Payable Book — M/s Sharma Traders, April 2026
| Bills Payable Book | |||||||
| Date | To Whom Payable | Drawer | Due Date | Where Payable | L.F. | Term | Amount (₹) |
|---|---|---|---|---|---|---|---|
| Apr 7 | Ramesh & Co. | Ramesh & Co. | Jul 10 | HDFC, Delhi | 3 months | 18,000 | |
| Apr 18 | Mohan Bros. | Mohan Bros. | Jun 18 | Axis, Chennai | 2 months | 10,000 | |
| Total → Bills Payable A/c Cr. | 28,000 | ||||||
Ledger posting: Total ₹28,000 → Bills Payable A/c Cr. ₹28,000 (liability increases). Creditors debited: Ramesh & Co. Dr. ₹18,000; Mohan Bros. Dr. ₹10,000 (their debt converted to bill accepted).
9. Comparison — All Six Subsidiary Books
| Book | Transactions Recorded | Source Document | Ledger: Book Total | Ledger: Individual |
|---|---|---|---|---|
| Purchase Book | Credit purchases of goods | Supplier's Invoice | Purchases A/c Dr. | Each Creditor Cr. |
| Sales Book | Credit sales of goods | Sales Invoice issued | Sales A/c Cr. | Each Debtor Dr. |
| Purchase Return Book | Goods returned to suppliers | Debit Note issued | Purchase Returns A/c Cr. | Each Creditor Dr. |
| Sales Return Book | Goods returned by customers | Credit Note issued | Sales Returns A/c Dr. | Each Debtor Cr. |
| Bills Receivable Book | Bills received from debtors | Bill of Exchange | Bills Receivable A/c Dr. | Each Debtor Cr. |
| Bills Payable Book | Bills accepted to creditors | Bill of Exchange | Bills Payable A/c Cr. | Each Creditor Dr. |
10. Trade Discount — Critical Rule
Trade Discount is NEVER recorded in the books of account. It is always deducted from the invoice price BEFORE the net amount is entered in any subsidiary book.
Example: Invoice price ₹50,000, Trade Discount 10% = ₹5,000. Amount entered in Purchase Book = ₹45,000 only. No separate entry for trade discount.
Cash Discount (allowed/received at time of payment) IS recorded — in the Discount column of the Cash Book.
Example: Invoice price ₹50,000, Trade Discount 10% = ₹5,000. Amount entered in Purchase Book = ₹45,000 only. No separate entry for trade discount.
Cash Discount (allowed/received at time of payment) IS recorded — in the Discount column of the Cash Book.
⚡ Quick Recall — Chapter 10 Key Points
Subsidiary Books = Special purpose books of original entry. Each records only ONE type of transaction. Faster posting, division of work.
Purchase Book: Credit purchases of goods only. Total → Purchases A/c Dr. Source document: Supplier's Invoice.
Sales Book: Credit sales of goods only. Total → Sales A/c Cr. Source document: Sales Invoice issued by us.
Purchase Return Book = Returns Outward Book. Source document: Debit Note (issued by us). Total → Purchase Returns A/c Cr. Creditor Dr.
Sales Return Book = Returns Inward Book. Source document: Credit Note (issued by us). Total → Sales Returns A/c Dr. Debtor Cr.
Bills Receivable Book: Bills received from debtors = Asset. Total → Bills Receivable A/c Dr. Debtor Cr.
Bills Payable Book: Bills accepted to creditors = Liability. Total → Bills Payable A/c Cr. Creditor Dr.
Trade Discount is NEVER recorded in books. Always deduct before entry. Cash Discount IS recorded in Cash Book discount column.
Cash purchases/sales → Cash Book. Asset purchases/sales on credit → Journal Proper. Only goods on credit go to Purchase/Sales Book.
Journal Proper = Residual Journal. Records opening entries, closing entries, rectification entries, and transactions not fitting other subsidiary books.
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20 MCQs — Special Purpose Subsidiary Books
Mixed difficulty — identification, source documents, Ledger posting, trade discount, and numericals. Q17–Q20 are CUET-level.
📚 Questions 1 to 20
1
Which of the following is recorded in the Purchase Book?
ACash purchase of goods ₹20,000
BCredit purchase of machinery ₹50,000
CCredit purchase of goods ₹35,000
DPurchase return of goods ₹5,000
Answer: C — Credit purchase of goods. The Purchase Book records ONLY credit purchases of goods dealt in by the business. Cash purchases go to Cash Book. Credit purchase of assets (machinery) goes to Journal Proper. Purchase returns go to Purchase Return Book.
2
The source document for recording an entry in the Sales Book is:
ADebit Note issued by customer
BSales Invoice issued by us to the customer
CCredit Note received from supplier
DCash memo from customer
Answer: B — Sales Invoice issued by us. When we sell goods on credit, we issue a Sales Invoice to the customer. This invoice is the source document for the Sales Book entry. Each line in the Sales Book is supported by one sales invoice.
3
The monthly total of the Purchase Book is posted to the Ledger as:
APurchases A/c Cr.
BCreditors A/c Dr.
CPurchases A/c Dr.
DSales A/c Dr.
Answer: C — Purchases A/c Dr. The monthly total of the Purchase Book is posted as one single debit to Purchases A/c in the Ledger. Individual suppliers (creditors) are credited separately in their own Ledger accounts. This is the power of subsidiary books — one total posting instead of many.
4
Purchase Return Book is also known as:
AReturns Inward Book
BReturns Outward Book
CBills Receivable Book
DPurchases Day Book
Answer: B — Returns Outward Book. Goods going OUT of our business back to the supplier = Returns Outward. Sales Return Book is Returns Inward (goods coming back IN from customers). This naming is from our perspective as a business.
5
When we return goods to a supplier, the document we issue is a:
ACredit Note
BDebit Note
CSales Invoice
DPurchase Order
Answer: B — Debit Note. When we return goods to a supplier, we issue a Debit Note because we are debiting the supplier's account in our books (reducing what we owe him). The supplier responds with a Credit Note. Debit Note = source document for Purchase Return Book.
6
When a customer returns goods to us, the document we issue is a:
ACredit Note
BDebit Note
CPurchase Invoice
DDelivery Challan
Answer: A — Credit Note. When a customer returns goods, we issue a Credit Note because we credit the customer's account in our books (reducing what he owes us). Credit Note is the source document for the Sales Return Book entry.
7
Trade discount in the Purchase Book is:
ARecorded separately in the Discount column
BCredited to Discount Received A/c
CDeducted from invoice price before entry — never recorded separately
DAdded to purchase price and recorded
Answer: C. Trade Discount is NEVER recorded in the books. It is deducted from the invoice price before making the entry. Only the net amount (Invoice Price − Trade Discount) is recorded in the Purchase Book. This rule applies to all subsidiary books.
8
Bills Receivable Book records:
ABills accepted by us payable to creditors
BBills of Exchange received from debtors
CCheques received from customers
DBills discounted with bank
Answer: B — Bills received from debtors. Bills Receivable = amount to be RECEIVED = Asset. Bills Payable = amount to be PAID = Liability. Bills Receivable Book total is posted to Bills Receivable A/c Dr. (asset increases) and individual debtors are credited.
9
The monthly total of the Bills Payable Book is posted as:
ABills Payable A/c Dr.
BBills Receivable A/c Cr.
CBills Payable A/c Cr.
DCreditors A/c Cr.
Answer: C — Bills Payable A/c Cr. Bills Payable is a liability (we owe money). Liability increases on Cr. side. Total → Bills Payable A/c Cr. Individual creditors are debited (their personal account balance reduces as debt converts to bill accepted).
10
Credit sale of old office furniture is recorded in:
ASales Book
BCash Book
CJournal Proper
DPurchase Book
Answer: C — Journal Proper. The Sales Book records only credit sales of GOODS (items the business normally trades in). Sale of furniture (a fixed asset) on credit does not go to the Sales Book — it goes to the Journal Proper. This is a very common board exam question.
11
The Sales Return Book total is posted to the Ledger as:
ASales Returns A/c Dr.
BSales Returns A/c Cr.
CSales A/c Dr.
DDebtors A/c Dr.
Answer: A — Sales Returns A/c Dr. Sales Returns reduces our sales income. It is debited (as a contra to Sales A/c). Individual debtors are credited because what they owe us decreases when they return goods. Sales Returns A/c Dr. + Individual Debtors Cr.
12
Which book is used to record transactions that do not fit any special purpose subsidiary book?
ACash Book
BPurchase Book
CJournal Proper (Residual Journal)
DSales Book
Answer: C — Journal Proper. Journal Proper is the residual journal. It records: opening entries, closing entries, adjustment entries, rectification entries, credit purchase/sale of assets, and any transaction not covered by other subsidiary books.
13
Goods purchased on credit ₹60,000, Trade Discount 10%. Amount entered in Purchase Book is:
A₹60,000
B₹54,000
C₹66,000
D₹6,000
Answer: B — ₹54,000. Trade Discount = 10% of ₹60,000 = ₹6,000. Net amount = ₹60,000 − ₹6,000 = ₹54,000. This is the only amount recorded. The creditor is also credited with ₹54,000 only. Trade discount is never shown in the books.
14
The Purchase Return Book records individual supplier's name and the entry in their Ledger account is:
ASupplier (Creditor) A/c Cr.
BSupplier (Creditor) A/c Dr.
CPurchase Returns A/c Dr.
DCash A/c Dr.
Answer: B — Supplier (Creditor) A/c Dr. When we return goods, the supplier owes us credit or we owe him less. So we Debit the supplier's account (reducing our liability to him). Purchase Returns A/c is Credited (total of book). Creditor Dr., Purchase Returns Cr.
15
Bills Receivable is classified as:
AA Liability in Balance Sheet
BAn Expense in P&L Account
CA Current Asset in Balance Sheet
DAn Income in P&L Account
Answer: C — Current Asset. Bills Receivable = money to be received from debtors on a future date = Asset. It appears on the Assets side of the Balance Sheet under Current Assets. Bills Payable = liability (money to be paid) = appears on Liabilities side.
16
Credit purchase of goods ₹40,000 is recorded in Purchase Book. The Ledger entry for the individual supplier is:
ASupplier A/c Dr. ₹40,000
BPurchases A/c Cr. ₹40,000
CSupplier A/c Cr. ₹40,000
DCash A/c Cr. ₹40,000
Answer: C — Supplier A/c Cr. ₹40,000. Credit purchase means we OWE the supplier. Liability to supplier increases = Credit his account. The complete double entry: Purchases A/c Dr. (from book total) and Supplier A/c Cr. (individual posting).
17
CUET: During April, M/s ABC had: Credit purchases ₹2,00,000 with Trade Discount 10%; Purchase returns ₹8,000 (net). Net Purchases A/c debit in Ledger for April is:
A₹2,00,000
B₹1,92,000
C₹1,80,000 Dr. in Purchases A/c and ₹8,000 Cr. in Purchase Returns A/c
D₹1,72,000 net in Purchases A/c
Answer: C. Purchase Book records net of trade discount: ₹2,00,000 − 10% = ₹1,80,000 → Purchases A/c Dr. ₹1,80,000. Purchase Return Book: ₹8,000 → Purchase Returns A/c Cr. ₹8,000. These are two separate Ledger accounts — NOT netted in the same account.
18
CUET: Assertion (A): Credit sale of machinery is recorded in the Sales Book. Reason (R): The Sales Book records all credit transactions involving the business.
ABoth A and R are true, and R correctly explains A
BA is true; R is false
CBoth A and R are false
DA is false; R is true
Answer: C — Both A and R are false. A is false: Credit sale of machinery goes to Journal Proper, NOT Sales Book. R is false: Sales Book records ONLY credit sales of goods dealt in by the business — not ALL credit transactions. Both the assertion and the reason contain common errors students make.
19
CUET: Sales Book total ₹3,50,000. Sales Return Book total ₹25,000. Net Sales figure shown in Trading Account is:
A₹3,75,000
B₹3,25,000
C₹3,50,000
D₹25,000
Answer: B — ₹3,25,000. Net Sales = Gross Sales − Sales Returns = ₹3,50,000 − ₹25,000 = ₹3,25,000. In the Trading Account, Sales Returns is shown as a deduction from Sales on the Cr. side. The Ledger maintains them in separate accounts: Sales A/c Cr. ₹3,50,000 and Sales Returns A/c Dr. ₹25,000.
20
CUET: A business accepted a Bill of Exchange for ₹30,000 drawn by its creditor. This is recorded in:
ABills Receivable Book → Bills Receivable A/c Dr.
BBills Payable Book → Bills Payable A/c Cr. and Creditor A/c Dr.
CCash Book → Bank column Cr.
DPurchase Book → Purchases A/c Dr.
Answer: B — Bills Payable Book. Accepted a bill = we ACCEPTED to PAY = Bills Payable (our liability). Bills Payable Book entry → Bills Payable A/c Cr. ₹30,000 (liability increases) + Creditor A/c Dr. ₹30,000 (their account balance reduces as debt converts to bill). NOT Bills Receivable (that is money to be received).
Chapter 10 — Live Quiz
20 questions · Subsidiary Books · One at a time · Instant feedback
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