As transactions occur, it is possible, at least in theory, to record them from source documents directly to the proper accounts in the Principal Book(s). but in actual practice, with hundreds of different accounts and thousands of transactions occurring every day, such a procedure would become cumbersome and confusing. Furthermore, after several recordings it world become difficult to locate a particular transaction. Not only this, the identity of individual transaction is lost and the purpose of recording it cannot be easily ascertained. For example, if the cash account, he might not succeed in his efforts unless he goes through the entire general ledger. A separate record of each transaction is therefore, necessary.

Need for Subsidiary Books

Ledger, as already noted, is the principal book of account which contains information relating to all business transaction both as regards debits and credit aspects. It provides a cumulative analysis of the effect of business transactions.

The use of ledger alone, though the principal book of accounts, such procedure usually is inadvisable. It fails to meet all the requirements of a complete accounting system. Various reasons why ledger is an incomplete record and why subsidiary books must also be maintained are as follows:

1.) Chronological history not available:- If business transactions are entered directly In individual accounts in ledger, the trader would not have as adequate picture of what occurs in his business. It is lacking when only ledger is used.

A business enterprises should keep a chronological record of its transactions in order to simplify references to its activities according to date.

2.) Complete transaction not shown at one place:- information disconnected each business transaction affects more than one account. When the debit and credit aspects of a transaction are entered in two shown at one place. Consequently, if there are a large number of accounts in ledger, it would become difficult to trace any transaction.

3.) Detail inadequate- ledger too bulky:- only meager information concerning a transaction can be shown conveniently in the accounts in ledger. If, however complete information is given in the ledger, it would become too bulky to be handled efficiently.
4.) Division of labour hampered:- only one person at a time con efficiently make entries in the ledger. He must have the entire ledger available in order to record the transaction in each account affected. A large enterprise, with a multitude of transactions to record, must use a more efficient system which permits many employees to work on the books at the same time.

5.) Errors difficult to locate:- Making the entries directly in the ledger increases the probability that errors will occur and makes errors mode difficult to locate and correct. The following are a few examples.

a.) Omitting one part of a transaction

b.) Entering part of a transaction on the wrong side of an account.

c.) Entering the wrong amount in an account. d.) Entering an amount in the wrong account.

These five reasons sufficiently explain the desirability of having. Subsidiary books where the transactions are shown—

a.) In chronological order

b.) Complete in one place, and

c.) With adequate explanations as to their nature.