PRINCIPLES OF

ACCOUNTANCY
Amity University Dubai Campus
Foundation (Non-Technical)
Code:
Second Semester Credits: 4

FAYAZ AHAMED
ASSISTANT PROFESSOR - ACCOUNTING

PRINCIPLES OF
ACCOUNTANCY
Course Objective:
The course objective is to enable the
students to learn the basic concepts of
accountancy. The students will be
given a detailed understanding on
accounting concepts, recording of
transactions and preparation of final
accounting statements.

Subsidiary Books

Subsidiary books and their

types
When the number of transactions is
large, recording of all transactions in
one
journal
will
not
only
be
inconvenient but also cause delay in
collecting information required.
Where transactions are numerous and
particularly of repetitive and similar
nature, It is practicable to divide the
main journal in to sub journal or in
various subsidiary books

Subsidiary books and their

types
Generally transactions can be classified into
broad groups, namely cash and non-cash
Cash receipts and payments can be grouped
in one category where credit purchases in
another category
Credit sales is yet another category.
Journal is subdivided in to such a way that a
separate book is used for each category of
transactions which are repetitive in nature
and are sufficiently large in number.

Need
Transactions can be classified and grouped
conveniently
according to their nature, as some transactions are usually of
repetitive in nature. Generally, transactions are of two
types:
Cash and Credit. Cash transactions can be grouped in one
category whereas credit transactions can be grouped in
another category. Thus, in practice, the main journal is subdivided in such a way that a separate book is used for each
category or group of transactions which are repetitive and
sufficiently large in number.
Each one of the subsidiary books is a special journal and a
book of original or prime entry. Though the usual type of
journal entries are not passed in these sub-divided journals,
the double entry principles of accounting are strictly followed.

i. Purchases Book records only credit

purchases of goods by the trader.
ii. Sales Book is meant for entering
only credit sales of goods by the
trader.
iii. Purchases Return Book records
the goods returned by the trader to
suppliers.
iv. Sales Return Book deals with
goods returned (out of previous sales)
by the customers.
v. Cash book: It is used for recording

Advantages of subsidiary book and

subdivision of journal
Facilitates division of work
Protection from fraud
Facility in checking business transactions. (sales
return purchase return)
Increase in efficiency (interest in particular work)
Less time more work( making entries in
subsidiary books is easy, posting takes less time.
Thus there is a saving of much time and labour).
Full information at one place
Flexible (necessary to keep all subsidiary book,
the number of books may increase or decrease)
Responsibility of the work.

Cash Book
Cash book is the special journal
which is used for recording all cash
transactions. It may be defined as
the book in which transactions are
recorded in detailed particulars of
all money received and paid.

FEATURES OF CASH BOOK

To keep record of only cash transactions

All receipts are recorded in debit side
All payments are recorded in credit side
Chronological (date wise) transaction recording of all
transactions.
Performs function of both journal and ledger.

Objects or Need of cash book

To find out the total cash receipts and
cash payments during a given period.
To ascertain the balance of cash in
hand and at bank at any time without
actually counting cash and examining
Bank passbook
To verify the correctness of cash in
hand and bank.

IMPORTANTS OF CASH BOOK

This is a very popular book and it
is maintained in all organisations.
Big or small, profit and non trading
concerns.
It helps the trader to understand
the cash in hand and cash at bank.
It is easy to find out any fraudulent
activities inside the organisation.