Monday, 25 June 2012

The Books of Prime Entry

The books of prime entry record individual transactions that occur within the day to day running of a company.


These are as follows:

§  Sales day book


This book records transactions that are associated with non cash sales i.e. credit sales that include information of customers, the amount, date of sale and description of the sale.



§  Purchase day book


These book records transactions that are associated with non cash purchases i.e. credit purchases. The book includes information of the supplier, the amount, date of purchase and the description of the purchase.


§  Sales returns day book

 

This book is used to record goods that are returned by the firm’s customers.

§  Purchases returns day book

 

This book is used to record goods that are returned by the firm to the supplier.


§  Bank Book


This book is used for recording bank transactions such as deposits and withdrawals. This can be also known as a pass book.


§  Cash Receipts Book


This book is used for recording cash only transactions coming into the business.


§  Cash Payments Book


This book is used for recording cash only transactions going out of the business.


 

So are you saying that we should disregard double entry altogether?


Most certainly not, never! If we used double entry to record every transaction that happened. A company would need an extremely large ledger which would be very difficult to manage every single transaction! These books sum up the totals for example 1 month. These figures are then put into the nominal ledger.


To further explain here is a useful link:

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