5. Books of prime entry and ledgers

Question 1

What are the books of prime entry

Answer 1

• The Sales Journal
• The Purchase Journal
• The Sales returns journal
• The Purchase returns journal
• The cash book
• The general journal

Question 2

What is the function of the sales journal

Answer 2

Lists all invoices for credit sales

Question 3

What is the function of the purchase journal

Answer 3

Lists all invoices for credit purchases

Also called the returns in journal

Question 4

What is the function of the sales returns journal

Answer 4

Lists all the credit notes received by the business

Also called the returns out journal

Question 5

What is the function of the cash book

Answer 5

Used to record bank receipts and bank payments, as well as cash discounts allowed and received

Question 6

The left side of the cash book is used to record

Answer 6

• A positive bank balance
• Amounts received by the business (e.g from customers)
• Discounts allowed to customers that have paid quickly

Question 7

The right side of the cash book is used to record

Answer 7

• A negative bank balance
• Amounts paid by the business
• Discounts received from suppliers for quick payment

Question 8

What is the function of the General journal

Answer 8

Used to record non-routine transactions

Question 9

What are the types of ledgers

Answer 9

• Receivables ledger
• Payables ledger
• General ledger

Question 10

What is the function of the receivables ledger

Answer 10

Includes T accounts for each credit customer

For customers it shows: invoices, credit notes, payments, discounts and the amount owed by that customer

Question 11

What is the function of the payables ledger

Answer 11

Includes T accounts for each credit supplier

For suppliers it shows:
invoices, credit notes, payments, discounts and amount owed by that supplier

Question 12

What is the function of the general ledger

Answer 12

Includes T accounts for every item that will be on the financial statements

Question 13

Recording invoices nd credit notes

Answer 13

Each invoice or credit note will be entered in the receivable or payable ledgers

Each invoice or credit note will be entered in one of the books of prime entry