Books of Prime Entries

Book of prime entry Transaction Business document

Sales journal Sold goods on credit to a customer. Sales invoice
Purchases journal Purchased goods on credit from a Purchases invoice
supplier.
Sales returns journal A customer returned goods that had been Credit note
sold on credit.
Purchases returns journal Returned goods purchased on credit to Debit note
the supplier.
Petty cash book Transaction involving small amount of Voucher
money.
Cash book Transaction paying by cash and eco-cash Receipt

Transaction paying by cheque or swipe Cheque counterfoil

Paid wages by cheque/cash Pay-slip/Wage
sheet/Payroll register
General journal Purchased non-current assets on credit invoice
from a supplier.
Sold non-current assets on credit. invoice
Non-current asset returned to the invoice
supplier.
Writing off irrecoverable debts.
Correction of errors.
A summary of person’s account for the Statement of account
month.

Journal
General journal
Business documents
Sales invoice
State the purposes of the business documents
-Invoice-The invoice is a demand for payment from a customer.
-Counterfoil-A cheque will be raised to pay the creditor and the counterfoil will be completed
as a record of the payment.
-Credit note- The credit note will acknowledge the return of goods by a customer.
-Debit note-The debit note will acknowledge the return of goods to the supplier.
Reasons for maintaining a petty cash book
-To record small cash payments
-To remove small cash payments from the main cash book
-To reduce the number of entries in the main cash book
-To reduce the number of entries in the ledger
-To remove small cash payments from the main cash book
-To allow the chief cashier to delegate some of the work
-Provides training for any junior staff members

Impest system
-The petty cashier starts each period with same amount of money.
-At the end of the period, the chief will make up the cash remaining so that it is equal to the
imprest amount.

Advantages of the imprest system of petty cash

-Chief cashier can control petty cash expenditure-The chief cashier is aware of exactly how
much is spent in each period.
-The cash remaining and the total of the vouchers received should always be equal to the
imprest amount.
-Can help to reduce fraud

Reasons why a trade discount is given

- To encourage bulk purchases
-To allow customers to make profit
-To attract repeat business
-To reward business in the same trade

NB: Trade discount is deducted (subtracted) before the transaction is recorded. Trade
discount should not be shown in the books of accounts.

Reasons for cash discount

- To encourage early/prompt payment

NB: Cash discount given to a customer is called discount allowed and cash discount offered
by a supplier is called discount recieved. Cash discount is subtracted before a transaction is
recorded and is shown in the books of accounts.