Working Papers

Audit working papers are the outcome of the documentation process. Working papers are the
record of various audit procedures performed, audit evidence obtained, allocation of work
between audit team members etc. Audit working papers are the documents and evidence that an
auditor collects and retains with himself during the audit.

Audit Working Papers

Audit working papers support the work that the auditor performs for providing assurance that he
conducts the audit in accordance with all the applicable standards on auditing (SA’s).
They constitute all the audit evidence that an auditor obtains. Also, it contains various procedures
that he applies to indicate that the audit is performed by him.
The auditor and his audit team members prepare the audit working papers while performing the
audit. Working papers are connecting link between the client’s records and audited financial
statements.
Working papers provide entity’s historical records as well as matters which should be taken care
and given due importance while performing future audit’s of such entity.
Audit working papers help auditor in audit planning and collecting evidence of the audit work
performed on which his opinion is based.
Working papers helps auditor in allocating the time required for performing various audit
procedures. The working paper helps auditor to maintain a record of various matters discussed
with management while conducting an audit.
Also, the working papers help audit team members to understand entity’s business, points which
they need to check on a priority basis, queries and actions against them in previous audits.
Working papers helps auditor in future cases to protect himself if the client files a suit against
auditor for auditor’s negligence while conducting the audit.

Working papers provide information on the following matters

 Information about audit team members and work allocated to them. Information regarding
unallocated work
 Whether he follows all the applicable standards on auditing (SA’s) or not
 He properly plans the audit or not
 Whether there was proper supervision over the work performed. Enabling the audit team
members to be responsible for the work performed by them
 An auditor undertakes an appropriate review or not
 Whether the evidence is relevant, sufficient and appropriate to support the opinion of the
auditor

We can divide the working papers into two parts

1. Permanent audit file
2. Current audit file
A permanent audit file contains information which is of continuous interest and is relevant in
future audits. Information like articles of association, loan agreements, leases, documents related
to internal control of the entity, record of accounting policies followed by the entity on a
continuous basis, significant observations of previous audits etc.
To view Audit Working Paper in Tally ERP9
Go to Gateway of Tally > Audit & Compliance > Audit Documentation > Audit Working
Paper (All Levels)

What are Subsidiary Books

What are Subsidiary Books? Subsidiary Books are books of Original Entry. They are also known
as Day Book or special journals. We record transactions of similar nature are in Subsidiary
Books. They are helpful in overcoming the limitations of journal book or journal entries. In this
article, we will see different types of Subsidiary Books.

Different Types of Subsidiary Books

We can divide the subsidiary books into the following types:
1. Cash book
2. Purchases book
3. Sales book
4. Purchases return or return outwards book
5. Sales return or return inwards book
6. Bills receivable book
7. Bills payable book
8. Journal proper

To view Subsidiary Books in Tally ERP9

Go to Gateway of Tally > Audit & Compliance > Audit & Analysis > F10 (Acc Reports)

Cash Book
It records all the cash and bank receipts and payments. It is a book of original entry as we record
transactions in it for the first time from the source documents such as vouchers, invoices, etc.
A cash book has a debit and a credit side both. Thus, it is similar to a ledger account. Hence, it
acts as a subsidiary book as well as a ledger account.
An organization can maintain a single column, double column or triple column cash book as per
its requirements. A single column cash book consists of only cash column.
A double column cash book consists of cash and bank column. While the triple column cash
book consists of cash, bank, and discount column. Usually, the firms use triple column cash
book.
Some organizations also maintain a petty cash book which records the petty or small cash
expenses of the firm.
Format of Cash Book
Date Particulars L.F. Cash Bank Discount Date Particulars L.F. Cash Bank Discount
 Allowed Received

Browse more Topics under Books Of Prime Entry

 Journal – Functions and Advantages 
 Sub Division of Journal
 Cash Book
 Purchase Day Book
 Sales Day Book
 Ledger Accounts
 Sub Division of Ledger

Purchases book
A firm records all its credit purchases of goods in Purchase Book or Purchase Day Book. While
it records all the cash purchases of goods in the Cash Book.
We do not record Purchases of assets in Purchase Book. Thus, they are recorded in the Journal
Proper.
Purchase Book Format
Name of the Supplier and details of Invoice
 Date L.F. Amount (₹) Remarks
purchases ref.

Sales Book
A firm records all credit sales of goods in the Sales Book or Sales Day Book. It records cash
sales of goods in the Cash Book. We do not record the sale of assets in the Sales Book.
Thus, we shall record them in the Journal Proper. In this case, also we record entries from the
source documents. Also, we record entries with the net amount of the invoice.
Sales Book Format
Invoice
 Date Particulars L.F. Amount (₹) Remarks
ref.

Purchase Return or Return Outward Book

We record the return of goods purchased in the Purchase Return Book. A Debit Note is prepared
for every return of goods in duplicate.
It contains the name of the supplier, details of goods returned and reason thereof. It needs to be
dated and serially numbered.
Purchase Return Book
Debit Note
 Date Particulars L.F. Details Totals Remarks
No.
Sales Return or Return Inwards Book
We record the return of goods sold in the Sales Return Book. A Credit Note is prepared for every
return of goods in duplicate.
The Credit Note contains the name of the customer, details of goods returned and reason thereof.
It also needs to be dated and serially numbered.
Sales Return Book
Outward
 Date Particulars L.F. Details Totals Remarks
invoice

Bills Receivable Book

We record all the acceptance of the bills in our favor in the Bills receivable book. We need to
post the total of bills receivable book to the Bills receivable A/c. Also, we need to post the
individual accounts of the customers.
Bills Receivable Book Format
Name of Name of How
No. of Daye of From Name of Date of Due Amount
the the L.F. disposed
bills receipt whom acceptor bill date of bill
receiver drawer off

Bills Payable Book

We record all the acceptance of the bills that we issue in favor of others in the Bills payable
book. We need to post the total of bills payable book to the Bills payable A/c. Also, we need to
post the individual accounts of the suppliers.
Bills payable Book Format
Amount of
Name
No. of Daye of To Name of Where Date of Due bill how
of the Term L.F.
bills acceptance whom drawer payable bill date disposed
payee
of

Journal Proper
It includes transactions relating to credit purchase and sale of assets, depreciation, outstanding
and pre-paid expenses, accrued and unearned income, opening and closing entries, adjustment
entries and rectification entries.

Solved Example on Types of Subsidiary Books

State the appropriate subsidiary book to record the following transactions:
1. Purchase of goods from Ram
2. Purchase of furniture in cash
3. Depreciation on plant and machinery
 4. Sale of goods for cash
5. Bad debts from Dolly
Ans.
1. Purchases Book
2. Cash Book
3. Journal proper
4. Cash book
5. Journal proper
An organization can maintain a single column, double column or triple column cash book as per
its requirements. A single column cash book consists of only cash column.
A double column cash book consists of cash and bank column. While the triple column cash
book consists of cash, bank, and discount column. Usually, the firms use triple column cash
book.
Some organizations also maintain a petty cash book which records the petty or small cash
expenses of the firm.

Receipt and Payment Account

“A receipt and payment account is a summarized cash book for a given period”.”This is a
summary of the cash transactions as in the cash book”. Non-profit organizations prepare receipt
and payment account at the end of the year. With the help of this account and some additional
information, we prepare income and expenditure account to disclose the true results of non-profit
organizations.

Receipt and Payment Account

Receipt and payment account cannot disclose the true result of a non-profit organization. We
prepare this account on the basis of the information available from the cash book.
Characteristics of Receipt and Payment Account
Following are the characteristics of receipt and payment account:
1. It is a summary of the cash book.
2. We record all the cash receipts during the whole year on its debit side. Whereas, we write all the
cash payments for the whole year on its credit side.
3. We include both receipts and payments in cash whether they are of capital and revenue nature.
4. We record only cash transactions in receipt and payment account.
5. It generally shows a debit balance. In the case of overdraft balance, its net balance may be
credit.
6. Its closing balance shows closing cash in hand and closing cash at the bank.
7. Non-cash items such as depreciation, outstanding expenses, accrued incomes are also shown in
this account.
Bank Reconciliation Statement (BRS)
A Bank reconciliation is schedule explaining any differences between the balance shown in bank
statement and balance
shown in Cash Book.
Petty Cash System-What is it?
 Petty Cash means “small” Cash
 Is used to make low value purchases
 Reimburse employees expense costs relating to the business
-Examples – Coffee,
-Postage Charges
-Payment for window cleaner
-Taxi, Bus & Train Fares
Petty cash reimbursements may have a set monetary limit, anything above the limit is
paid by cheque or an automated method.