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Data Sources, records and Books of prime entry

F3 Financial Accounting

Presenter: Saqib Khalil

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Accounting records Data sources Books of prime entry Double entry Ledger accounts Trial balance Year end adjustments Inventory Accrual & prepayments Depreciation Bad & doubtful debts Correction of errors Financial statements F3 Financial Accounting Presenter: Saqib Khalil 2 .

Source documents Quotation ‡ A written offer to provide goods or services at a particular price ‡ Sent by supplier to potential buyer Purchase order ‡ An order note for goods required from the supplier ‡ Sent by customer to supplier to officially place the order Sales order ‡ An order note for goods required by customer ‡ Issued by supplier usually sent to production dept F3 Financial Accounting Presenter: Saqib Khalil 3 .

of the customer F3 Financial Accounting Presenter: Saqib Khalil 4 .Source documents cont Goods dispatched note ‡ A list of the goods sent to a customer ‡ Prepared by the supplier Goods received note ‡ A list of the goods received from the supplier ‡ Prepared by the recipient business Invoice ‡ A demand for payment in respect of the goods supplied ‡ Issued by supplier and sent to the accounts dept.

Remittance Advice ‡ A document accompanying the payment to supplier ‡ It¶s a detail of the invoices being paid F3 Financial Accounting Presenter: Saqib Khalil 5 . For example in case of goods returned by the customer or over invoicing.Source documents cont Debit Note ‡ A note sent to supplier for the goods returned (purchases returned) ‡ It¶s a demand for issuance of a credit note Credit Note ‡ A document used to cancel all or part of the previously issued invoice. ‡ Issued by supplier and sent to customer.

Source documents cont Receipt ‡ A note to confirm that the payment has been received ‡ Issued by supplier Statement Or Supplier statement ‡ A document listing all the recent transactions between supplier and the customer ‡ Periodically sent by supplier to customer F3 Financial Accounting Presenter: Saqib Khalil 6 .

This summarized information is posted to ledger accounts via double entry. increasing the chances of error. Books of prime entry act as source for preparing double entry. accounts y y y y y quickly become cluttered. To avoid this. Presenter: Saqib Khalil 7 F3 Financial Accounting .Books of prime entry y If ledgers are updated as each transaction took place. The details about the transaction available on source document are recorded in books of prime entry. weekly. monthly depending upon volume of transactions). transactions are first recorded in books of prime entry. also it will be difficult to track a transaction. The transactions recorded in day books are totaled periodically (daily.

Books of prime entry Following are the books maintained Book of prime entry Sales day book Purchase day book Sales returns day book Purchase returns day book ash book Petty cash book The journal Transaction recoded redit sales redit purchases Return of goods sold on credit Return of goods purchased on credit ash and bank transactions All small cash transactions All transactions not recorded elsewhere Presenter: Saqib Khalil Source document Sales invoice issued Purchase invoice received redit note issued redit note received from supplier Vouchers. receipts & cheques Petty cash vouchers No source document but include narrative 8 F3 Financial Accounting .

9 F3 Financial Accounting   harly a/c     .500 1.1.000 12.1.09 2.000 3.500 Single entry as each individual transaction takes place Dr Alin a/c Dr Bell a/c Dr 8000 3500 1000 Double entry from sales day book Personal accounts part of double entry Dr alin Dr bell Dr charly $8000 $3500 $1000 $12500 Presenter: Saqib Khalil Control account part of double entry Dr Receivable ledger control a/c $12500 r Sales $12500 r Sales Single entry (for amount receivable) will be made to update the each of the individual a/c.09 Invoice # 00001 00002 00003 ustomer Alin Bell ahrly Total Ledger folio RL 1 RL 45 RL 09 $ 8.1.Sales day book Date 1.09 2.

09 2.000 3.000 5.1.1. 10 $12.000 $3.000 5.09 Invoice # 00012 00654 00524 Supplier David Elice Graham Total Ledger folio PL 1 PL 45 PL 55 $ 4.500 Presenter: Saqib Khalil ¡ ¡ ¡ .1.500 Double entry from Purchase day book Personal accounts part of double entry Dr purchases r David r Elice r Graham F3 Financial Accounting Control account part of double entry Dr purchases $12500 r Payables ledger control a/c $12500 Single entry (for amount receivable) will be made to update the each of the individual a/c.500 Single entry as each individual transaction takes place r David r r Elice Graham 8.500 $4.09 3.Purchase day book Date 1.500 12.000 3.000 $5.

11 ¢ ¢ ¢ .09 2.000 $200 Presenter: Saqib Khalil Single entry (for amount receivable) will be made to update the each of the individual a/c.200 $2.2.Sales return day book Date 1.000 200 Total 2.200 $2.200 $2. RL 1 RL 09 $ 2.000 200 Single entry as each individual transaction takes place r Alin r harly 2.200 Double entry from Sale return daybook Personal accounts part of double entry Dr Sales Return r Alin r harly F3 Financial Accounting Control account part of double entry Dr Sales Return r Receivable ledger control a/c $2.2.09 redit note # N 001 N 002 ustomer Alin harly Ledger ref.

purchase return day book Personal accounts part of double entry Dr Elice Dr Graham $1. 12 r purchase Return $2. PL 45 PL 55 $ 1.1.500 Total 2.Purchase return day book Date 2.000 $1.000 $1.500 Double entry .09 redit note # 00123 00789 Supplier Elice Graham Ledger ref.09 3.1.200 r Purchase Return $2.500 F3 Financial Accounting Presenter: Saqib Khalil .200 Single entry (for amount receivable) will be made to update the each of the individual a/c.500 Single entry as each individual transaction takes place Dr Elice Dr Graham $1.500 Control account part of double entry Dr Payable ledger control a/c $2.000 1.

expense payments.g.Cash book y All transaction involving cash at bank are recoded in cash book. y Generally two separate cash books are maintained. cash sales/purchase. y Cash receipts book y Cash payments book y Upon settlement of payable and receivable accounts any settlement discount is also recorded in cash book F3 Financial Accounting Presenter: Saqib Khalil 13 . e. cash received from/paid to credit customer/supplier.

700 Single entry as each individual transaction takes place Cr Alin .000 F3 Financial Accounting Presenter: Saqib Khalil 14 .1.500 Disc.1.000 9.Cash Receipt Book Date 1.200 disc all 300 4.700 $800 $9.500 $4.09 2.09 3.000 3.000 Receivable 6.bank 5.200 12.000 3.500 4.1.500 disc all 500 Cr Bell-bank 3. allowed 500 300 800 Bank 5.09 Details Alin Cash sales Bell Total Sales 4.500 Double entry from Cash receipt book Dr Bank Dr Discount allowed r Receivables ledger control a/c r Sales $12.

000 1000 Bank 2.000 $5.000 5.Cash Payment Book Details Purchase Graham Rent Total 2.000 8.000 Payable 5.000 5.000 1.500 500 Purchases 2.000 F3 Financial Accounting Presenter: Saqib Khalil 15 .500 Disc.500 $1.000 $500 $8. Rcvd 500 Rent 1.000 Single entry as each individual transaction takes place Dr Graham±bank 5000 disc rec 500 Double entry from Cash payment book Dr Purchaes Dr payable ledger control a/c Dr Rent expense Cr Discount Received Cr Bank $2.