Summary
Books of Prime Entry are specialized journals where transactions are first recorded before being posted to ledger accounts, providing a clear audit trail from source documents to final accounts.
- Sales Journal — Records all credit sales to customers. Example: Sold goods on credit to J. Smith for $800.
- Sales Returns Journal — Records goods returned by customers. Example: J. Smith returned faulty goods worth $100.
- Purchases Journal — Records all credit purchases from suppliers. Example: Purchased goods on credit from ABC Suppliers for $2,400.
- Purchases Returns Journal — Records goods returned to suppliers. Example: Returned defective goods to ABC Suppliers worth $300.
- General Journal — Records transactions not covered by other journals. Example: Purchased a delivery van on credit from Auto Dealers for $15,000.
Exam Tips
Key Definitions to Remember
- Books of Prime Entry: Specialized journals for initial transaction recording.
- Sales Journal: Records credit sales.
- Purchases Journal: Records credit purchases.
Common Confusions
- Confusing sales journal with cash book for cash sales.
- Misunderstanding the use of general journal for non-routine entries.
Typical Exam Questions
- What is the purpose of the sales journal? Records all credit sales to customers.
- Which journal records goods returned by customers? Sales Returns Journal.
- Where do you record the purchase of a non-current asset on credit? General Journal.
What Examiners Usually Test
- Understanding the purpose and function of each book of prime entry.
- Ability to identify which transactions go into which journal.
- Knowledge of the accounting process flow from transaction to ledger.