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Principles of Accounts > Books Of Original Entry > Flashcards

Books Of Original Entry Flashcards

1
Q

List the 7 books of original entry

A
  1. General journal
  2. Purchases book
  3. Sales book
  4. Returns outwards book/purchases returns
  5. Returns inwards book/ sales returns
  6. Cash book
  7. Petty cash book
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2
Q

What are the 5 components of a general journal entry?

A
  1. Date eg.(1998 July 1)
  2. Account title and description (details)
  3. Posting reference (“Folio”)
  4. Debit
  5. And credit
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3
Q

What is a general journal?

A

It is where business transactions and events are first recorded …….and, for that reason, it is often called a “book of first entry”.

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4
Q

List uses of the general journal.

A
  1. Writing off bad debts
  2. Recording of issues
  3. To record purchase and sale of fixed assets on credit
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5
Q

What is the purpose of the purchases book?

A

To record all credit purchases of goods which are intended for resale in the business.

…It is a record kept by a business of what it buys on credit each day

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6
Q

The purchase book is also known as…

A

Bought book, invoice book or purchase day book

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7
Q

What is a sales book?

A

Sales book is a book of original entry or a subsidiary book that is used to record the credit sales of the goods

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8
Q

What basic information is recorded in the purchases book?

A
  1. Transaction date
  2. Name of supplier
  3. Supplier invoice number
  4. Supplier invoice amount
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9
Q

What information is stored in the sales book?

A
  1. Customer name
  2. Invoice number
  3. Invoice date
  4. Invoice amount
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10
Q

List uses of the sales day book.

A
  1. To record the credit sales of a transaction
  2. Allows for segregation of duties
  3. The sales journal is a chronological list of the sales invoices. This is used to save the time by avoiding the cluttering of the general ledger with unnecessary detail
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11
Q

What does the return outwards book record?

A

The return outwards book records the goods returned to suppliers.

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12
Q

What is return inwards account (sales return account) used to record?

A

Stocks returned TO the business BY customers

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13
Q

The return inwards account should be….(debited/credited)

A

Debited

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14
Q

The return outwards account is always…..(debtied/credited)

A

Credited

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15
Q

Finding the difference between the totals of the debit and credit sides of an account is referred to as…

A

Balancing off

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16
Q

Balance carry down or Balance CD is shown on the……of the month on the …… side

A
  1. Last day

2. Smaller

17
Q

Balance brought down or Balance BD is shown at the ……….. of the next month on the ……… side of the balance carry down outside the account.

A
  1. Beginning

2. Opposite

18
Q

What is a cash transaction?

A

A cash transaction is the immediate payment of cash for the purchase of an asset.

19
Q

Distinguish between cash and credit transactions

A

A cash transaction is a transaction where payment is settled immediately whereas the payment for a credit transaction is settled at a later date.

20
Q

List 4 forms of payment

A
  1. Cash
  2. Cheques
  3. Credit cards
  4. Debit cards
21
Q

What is a credit card?

A

A financial instrument issued by banks that allows you to make purchases and pay for them later.

22
Q

What is a debit card?

A

A payment card that deducts money directly from a customer’s checking account when it is used.

23
Q

What is another name for debit card?

A

Check card, bank card

24
Q

List 7 source documents related to the books of original entry.

A
  1. Sales invoice
  2. Purchases invoice
  3. Credit notes
  4. Debit notes
  5. Petty cash vouches
  6. Receipts from cash transactions
  7. Non-cash transactions
25
Q

What are trade and cash discounts?

A

Trade discount refers to the reduction in list price (discount) allowed by a supplier to the consumer while selling productta in bulk quantities.

Cash discount is discount given by the supplier on its cash payments to recover the cash debts on time as it motivates buyers to pay early as they are given a discount if the pay within the stipulated time

26
Q

Distinguish between trade and cash discounts

A

Trade discount is provided to customers who buy in bulk with the aim of promoting bulk buying.

Cash discounts are given to customers to encourage them to pay within the specified time as they are getting a reduction of price.

27
Q

How do you balance the cash book?

A

Inserting the excess of the debit on the credit side as “by balance carry down” to make both sides agree.

The balance is then shown on the debit side by “To balance brought down” to start the next period.

28
Q

What is petty cash?

A

A small reserve of cash kept on-site at a business location for incidental cash needs.

29
Q

What is the imprest system?

A

An accounting system for paying out and sibsequently replenishing petty cash.

Principles of Accounts (11 decks)

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