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C H A P T E R

Sub-Division of Journal

(Purchases Book, Sales Book, Purchases Return Book,
Sales Return Book and Journal Proper)

MEANING OF KEY TERMS USED IN THE CHAPTER

1. Purchases Book It is a subsidiary book in which credit purchase of goods traded in are
recorded.
2. Purchases Return or It is a subsidiary book in which returns outward, i.e., returns of
Returns Outward Book goods purchased is recorded.
3. Sales Book It is a subsidiary book in which goods sold on credit are recorded.
4. Sales Return or Returns It is a subsidiary book in which goods returned by the customers
Inward Book are recorded.
5. Journal Proper It is one of the subsidiary books, which is used to record those
transactions which cannot be recorded in any other subsidiary
book such as (1) Cash Book, (2) Purchases Book, (3) Sales Book,
(4) Purchases Return Book and (5) Sales Return Book.
6. Debit Note It is the document prepared to debit the account of the seller. For example,
purchaser of goods prepares a Debit Note when goods are returned to
the seller.
7. Credit Note It is the document prepared to credit the account of the buyer. For
example, seller of goods prepares a Credit Note when goods are returned
by the purchaser.
8. Trade Discount Trade discount is the discount allowed by the seller on goods sold. It
is recorded in the Purchases Book by the purchaser and Sales Book by
the seller. But, in the ledger, purchases and sales are accounted
at net amount.

CHAPTER SUMMARY

• Purchases Book (also known as Purchases Journal) is used for the purpose of recording goods purchased
on credit with the purpose to resell or use them in production.
Cash purchases are not recorded in the Purchases Book. They are recorded in the Cash Book.
• Sales Book (also known as Sales Journal) is used for the purpose of recording the sale of goods on credit.
• Purchases Return Book (also known as Returns Outward Book) is used for recording return of goods
purchased on credit.