Books Of Prime Entry

Question 1

What is petty cash

Answer 1

The small amount of cash that most businesses hold in order to make small cash payments.

Question 2

What is the petty cash book?

Answer 2

Where all petty or small payments made through the petty cash fund are recorded systematically.

Question 3

What is the discounts received day book?

Answer 3

Used to record the discounts that have not been deducted at the point of invoice but were offered on a conditional basis (eg: prompt payment discount)

Question 4

What is the sales day book

Answer 4

A list of the sales invoices that are to be processed for a given period.

Question 5

What is a purchases day book

Answer 5

A list of purchases invoices that are to be processed for a given period

Question 6

What is a cash book?

Answer 6

The record of cash receipts and payments.

It can Form part of the double entry bookkeeping system as well as being a book of prime entry

Question 7

What does SCLA stand for?

Answer 7

Sales ledger control account.

Just means “receivables”.

Question 8

What is a discounts allowed day book?

Answer 8

Used to record the discounts that have been offered to customers on a conditional basis (so have not yet been deducted on the invoice)

Question 9

What would be the column headings in the sales / purchases day books?

Answer 9

Date

Invoice number

Customer / Supplier name

Customer / Supplier code

Total amount

VAT amount

Net amount

Question 10

What is the difference between gross and net amounts?

Answer 10

Gross: total balance including VAT

Net: value excluding VAT (the true sales price)

Question 11

What does two column analysed mean?

Answer 11

There are separate columns for different types of transaction instead of one total column.

Eg: the cash book has separate columns for cash and bank

Question 12

Are the following daybooks dealing with cash or credit transactions?

• sales day book
• sales returned day book
• purchases day book
• purchases returned day book
• cash book
• discounts allowed day book
• discounts received day book
• petty cash book

Answer 12

• sales day book CREDIT
• sales returned day book CREDIT
• purchases day book CREDIT
• purchases returned day book CREDIT
• cash book CASH
• discounts allowed day book CREDIT OR CASH
• discounts received day book CREDIT OR CASH
• petty cash book CASH

Question 13

List 8 types of day book

Answer 13

Sales

Purchases

Sales returned

Purchases returned

Cash book

Petty cash book

Discounts allowed

Discounts recieved

Question 14

Define casting and cross-casting

Answer 14

Casting: adding a vertical column

Cross-casting: adding a horizontal column

Question 15

What is a sales returned day book?

Answer 15

A list of the credit notes that are to be processed for a given period

Question 16

What is a purchases returned day book?

Answer 16

List of the purchase invoices that are to be processed for a given period

Question 17

When would it be unnecessary to have a sales return day book and what would be done instead?

Answer 17

In businesses where sales returns are fairly low it would not justify keeping a separate sales returns daybook.

Instead any sales returns are recorded as negative values in the sales day book.

Question 18

What does balance b/d mean?

Answer 18

Balance brought down

Question 19

Would the total column of the daybooks include trade / bulk discounts?

Answer 19

Any discounts should be deducted before calculating the total

Question 20

What is the difference between a 2column and 3column cash book?

Answer 20

3column cash books have an extra column for discounts.

Question 21

Which side of a cash book is cash received?

Answer 21

Left hand is always money recieved

Question 22

Are cheques and bank transfers included in the cash book?

Answer 22

Yes

Question 23

What are analysed cash books?

Answer 23

A cash book with additional columns for organising sources of cash into different types

Eg: cash column (just cash) and bank column (cheque / bank transfer) both within the cash book.

Question 24

Would trade or bulk discounts be recorded in the discounts allowed daybook?

Answer 24

No.

Question 25

Define payable

Answer 25

A credit supplier (somebody who the business needs to pay)

Question 26

Define receivable

Answer 26

Credit customer (somebody who needs to pay the business)