chapter 3 Flashcards
books of prime entry
a book used to list all transactions of a similar nature before they are posted to the ledger
all books of prime entru
sales journal
sales return journal
purchases journal
purchases returns journal
cash book
journal
invoice
a document that a business issues to its customer to pay for the goods or services supplied to them on credit
sales journal
the book of prime entry used to record all sales made on credit. it reduces the number of entries that must be made in the sales account
credit note
a document given to a customer when goods sold on credit are returned to the seller; the amount is deducted from the amount owed by the customer
sales return journal
the books of prime entry used to record all goods returned from credit customers
purchases journal
the book of prime entry used to record all purchases bought on credit
purchases return journal
the book of prime entry used to record all goods returned to suppliers that have been bought on credit
advantages of using books of prime entry
it is to cut down on the number of individual entries in some ledger accounts. by posting totals of the sales, sales returns, purchases and purchases returns journals to the ledger, the number of entries in the sales, sales return, purchases and purchases returns accounts are reduced thus it makes transactions of similar types to be easily tracked and track back any mistake posted in the ledger account to the appropriate book of prime entry
cash book
the book of prime entry used to record all bank, cash and cash discounts. it is also part of the ledger system replacing separate cash and bank ledger accounts. it is the only book of prime entry that is also part of the double entry systems.
what do cash books contain
it contains debit entries for cash and bank and credit entries for cash and bank. it keeps the information about cash and bank account entries side by side. the cash columns are entered in exactly the same way as the bank columns. cash received is debited, and cash payments are credited, in the cash columns. bank receipts are debited, and bank payments credited, in the bank columns
how can removing the cash and bank account from the ledger help to divide the work between a number of employees
One is that it may provoke retaliation and the other is that it may reduce the pressure on domestic firms to become more efficient.
how is a cash book used to record discounts
An additional column on the left side of the bank account records discounts allowed, and an additional column on the right side records discounts received. This form of cash book is sometimes known as a three-column cash book as there are three columns of figures on both sides of the book. When a payment is received from a customer who has deducted a cash discount, enter the amount of the discount in the discounts allowed column, next to the amount received in the cash or bank column.
how should discounts be entered in the cash book
When a payment is received from a customer who has deducted a cash discount, enter the amount of the discount in the discounts allowed column, next to the amount received in the cash or bank column. Enter discounts received from suppliers in the discounts received column, next to the amount paid in the cash or bank column.
why are discounts listed in the cash book
Discounts are listed in the cash book because it is a book of prime entry. Discounts allowed and discounts received must still have their own separate ledger accounts.
