Study Notes
Books of original entry, also known as books of prime entry, are specialized accounting records where business transactions are first recorded. They help reduce errors, improve organization, save time, and provide an audit trail.
- Purchases Day Book — Records credit purchases of goods intended for resale. Example: Buying inventory on credit from a supplier.
- Purchases Returns Day Book — Records goods returned to suppliers on credit. Example: Returning defective items to a supplier.
- Sales Day Book — Records credit sales of goods to customers. Example: Selling products on credit to a customer.
- Sales Returns Day Book — Records goods returned by customers on credit. Example: Accepting returned goods from a customer.
- Cash Book — Records all cash and bank receipts and payments. Example: Recording cash sales and bank deposits.
- Petty Cash Book — Records small day-to-day business expenses. Example: Paying for office supplies with petty cash.
- General Journal — Records non-routine and correcting entries. Example: Correcting an error in the accounts.
Exam Tips
Key Definitions to Remember
- Books of original entry: First place where transactions are recorded.
- Purchases Day Book: Records credit purchases of goods for resale.
- Sales Day Book: Records credit sales of goods to customers.
Common Confusions
- Confusing Purchases Day Book with Cash Book for cash purchases.
- Mixing up Sales Returns Book with Purchases Returns Book.
Typical Exam Questions
- Which book records goods returned to suppliers? Purchases Returns Book
- Cash purchases of goods should be recorded in the? Cash Book
- The imprest system is used for? Petty Cash Book
What Examiners Usually Test
- Understanding the purpose of each book of original entry.
- Ability to identify which transactions go into which books.
- Knowledge of the format and structure of each book.