Books of Original Entry

Question 1

What are the books of original entry?

Answer 1

The books or original entry are the first place where transactions are recorded prior to being posted to the double entry records in the ledgers. 
They are alternatively called:
1. Prime books of entry
2. Journals
3. Day Books
4. Subsidiary Books

Question 2

How do the Books of Original Entry assist management?

Answer 2

1. Make it easier to retrieve information on debtors and creditors.
2. Saves time
3. Eliminates details from the ledgers.

Question 3

What are the Books of Original Entry?

Answer 3

1. Sales Journal/Daybook
2. Cash Book
3. Sales Returns Journal/Daybook (Returns Inwards)
4. Sales Outwards Returns Journal/Daybook (Returns Outwards/ Purchases Returns Journal)
5. Purchases Journal/Daybook
6. Petty Cash Book
7. General Journal

Question 4

What are the transactions that go in each book?

Answer 4

1. Sales - Credit Sales of stock
2. Purchases - Credit Purchases of stock
3. Cash Book - All cash and bank transactions (Sales/Purchases)
4. Sales Returns - Stock returned by customers.
5. Purchases Returns - Stock returned to suppliers.
6. Petty Cash - Small payments/receipts/
   items of small value.
7. General Journal - all types of transactions.

Question 5

What are Cash Transactions and Credit Transactions?

Answer 5

Cash transactions involve the immediate receipt or payment of money for a transaction.
Eg. Cash, Cheques, Bank cards

Credit transactions are those where the receipt or payment of money is delayed; the payment takes place at a later date. The business has to keep a record of the amount owing to the supplier.

Question 6

What are Source Documents?

Answer 6

They are the first step in the accounting cycle. When a source document is received or issued, key information is extracted from the document and recorded in one of the books of original entry.
They must be stored properly as they provide evidence that a transaction has occurred. Every entry in the accounting system should be traceable to them.

Question 7

What are the Source Documents for the Books of Original Entry?

Answer 7

1. Sales Journal - Sales Invoice
2. Purchases Journal - Purchases Invoice
3. Sales Returns - Credit note given
4. Purchases Returns - Debit note given
5. Cash Book - Receipts, bills and cheques.
6. Petty Cash - Petty cash vouchers.
7. General Journal - Invoices, bills, vouchers.