Chapter 5 Flashcards
A book where transactions are first listed in date order: these entries are later posted to ledger accounts using the double-entry system of book-keeping
Book of prime entry
Contains the bank and cash accounts of a business. May be a two-column one or a three-column one if it records discounts.
Cash book
Cash discounts allowed by a supplier to a business when payment is made within the qualifying period. An income.
Discounts received
Cash discounts given to a customer by a business for prompt payment. An expense incurred by the business for having its debts settled promptly
Discounts allowed
Arrangement by the business with its bank for a creditor (account payable) to transfer money from the business’ account on pre-arranged dates
Direct debit
A cheque that has been rejected for payment when deposited in the bank
Dishonoured cheque
Used to record low-value cash transactions such as petrol charges, cleaning expenses and postage stamps
Petty cash book
A fixed amount of money with which the petty cashier starts an accounting period
Float or imprest
A document showing the purpose for which the petty cash is required and the date. Signed by the person making a claim for cash for an expense
Petty cash voucher
A book of prime entry where credit sales are recorded
Sales journal
A book of prime entry where credit purchases are recorded
Purchases journal
A book of prime entry meant for the records of all transactions that cannot be recorded in other books of prime entry
General journal
A brief description of the transaction recorded in the general journal. Sometimes contains a reference to the source document that proves the transaction has taken place
A narrative
Book of prime entry
A book where transactions are first listed in date order: these entries are later posted to ledger accounts using the double-entry system of book-keeping
Cash book
Contains the bank and cash accounts of a business. May be a two-column one or a three-column one if it records discounts.
Discounts received
Cash discounts allowed by a supplier to a business when payment is made within the qualifying period. An income.
Discounts allowed
Cash discounts given to a customer by a business for prompt payment. An expense incurred by the business for having its debts settled promptly
Direct debit
Arrangement by the business with its bank for a creditor (account payable) to transfer money from the business’ account on pre-arranged dates
Dishonoured cheque
A cheque that has been rejected for payment when deposited in the bank
Petty cash book
Used to record low-value cash transactions such as petrol charges, cleaning expenses and postage stamps
Float or imprest
A fixed amount of money with which the petty cashier starts an accounting period
Petty cash voucher
A document showing the purpose for which the petty cash is required and the date. Signed by the person making a claim for cash for an expense
Sales journal
A book of prime entry where credit sales are recorded
Purchases journal
A book of prime entry where credit purchases are recorded
General journal
A book of prime entry meant for the records of all transactions that cannot be recorded in other books of prime entry
A narrative
A brief description of the transaction recorded in the general journal. Sometimes contains a reference to the source document that proves the transaction has taken place
What is the advantage of using books of prime entry?
Used to list and group together similar transactions so that totals can be posted to the ledger
Allows the work to be divided between different of staff
Quicker way to record transactions
Fewer errors
What do the petty cash book and cash book have in common?
Both are books of prime entry and ledger accounts at the same time
What is the advantage of a petty cash book?
Reduces the number of entries in the cash book
Good task for a more junior member of staff to carry out (errors are not serious)
What is the document that acts as proof of the transaction for the petty cash book?
Petty cash voucher
Contra entry
Entry which appears on both sides of the cash book
What are credit customers?
Sales/trade receivables
What are credit suppliers?
Purchases/trade payables
