3. Accounting Systems

Question 1

Which transactions must be recorded in a book of prime entry?

Answer 1

Invoices (for sales and purchases), cheques (paid and received) and credit notes

Question 2

What are the 7 main books of prime entry?

Answer 2

1. Cash book
2. Sales day book (sales on credit)
3. Purchases day book (purchases on credit)
4. Petty cash book
5. Journals
6. Sales returns day book
7. Purchases returns day book

Question 3

What is the imprest system?

Answer 3

When cash is removed from the petty cash book it is replaced by a petty cash voucher to top up to decided value, and the petty cash is topped up at the end of the period - it is a control system.

Question 4

What are the 5 main types of adjustments made by journals?

Answer 4

1. Year-end inventory adjustment
2. Recording bad debt write offs
3. Recording period-end accruals and pre-payments
4. Recording period end depreciation
5. Correction of errors

Question 5

Where are the totals from the books of prime entry transferred to at the period end?

Answer 5

The nominal ledger (using double entry)

Question 6

What are the 3 advantages of coding systems?

Answer 6

1. Customers with the same name can be identified
2. Codes may be shorter than full names
3. Easy for staff to identify the type of account

Question 7

What are the 5 types of coding system?

Answer 7

1. Sequence codes
2. Block codes
3. Significant digit codes
4. Hierarchical codes
5. Faceted codes