Chapter 4: Sources, records and books of prime entry

Question 1

[C4/1.1]Where does business transaction are recorded?

Answer 1

Business transaction recorded on source documents.

Question 2

[C4/1.1]Types of source documents?

Answer 2

• Quotation. (Fixed price for services Sup>Cus)
• Purchase order. (Company wishes to purchase Cus>Sup)
• Sales order. (Details an order placed by customer Sup>Cus)
• Goods received note. (List of received goods Cus>Sup)
• Goods dispatched note. (Goods sent out Sup>Cus)
• Invoice.
• Statement. (Document listing all transactions Sup>Cus)
• Credit Note. (Document mention goods returned, overpayments made Sup>Cus)
• Debit Note.
• Remittance advice. (Details which invoices are being paid and which credit notes offset Sup>Cus)
• Receipt. (Confirmation of payment received Sup>Cus)

Question 3

[C4/1.2]To what orders does invoice relate?

Answer 3

Invoice relates to a sales order or a purchase order.
When supplier sells it sends an invoice.
When customer buys it receives it gets an invoice.

Question 4

[C4/1.2.1]What does an invoice show?

Answer 4

• Name and Address.
• Date of the sale.
• Description of what is being sold.
• Quantity and unit price.
• Details of trade discount.
• Total amount of the invoice including.

Question 5

[C4/3] The main books of prime entry?

Answer 5

• Sales day book (Invoices sent)
• Purchase day book (Invoices received, credit purchases only)
• Sales returns day book (When customer returns)
• Purchase returns day book
• Journal
• Cash Book (Bank account)
• Petty Cash book (occasional payments for odd items of expense)

Question 6

[C4/3]Where does invoices and credit notes are recorded?

Answer 6

Invoices and credit notes recorded in day books.

Question 7

[C4/5.3]

• What is Imprest system?
• What is Imprest amount?

Answer 7

• When the amount of money in petty cash is kept at an agreed sum.
• The agreed sum called imprest amount.