Source Documents and Prime Entry Books

Erandi Lakshika UCSC

Source Documents
Are documents which originates at the point of transaction, from which the book keeper picks up the transaction for the purpose of recording in the books.

Examples
Receipt
Which record the receipt of cash or cheques

Payment Voucher
Which records the payment made by cash or cheque

Sales Invoice
Which records cash or credit sales

Examples cont.
Suppliers Invoice
Which is received from the supplier indicating the value of good purchased

Debit Note
Which records any debits made to a personal account of a customer or supplier
Eg: purchases returns to a supplier

Credit Note
Which records any credit made to a personal account of a customer or supplier
Sales returns from a customer

Examples cont.
Minutes of board meetings
When there is a decision made at the board meeting which requires an accounting entry
eg: writing off a bad debt

Prime Entry Books

Prime entry books are those books where the first entry of a transaction is made.

Journal
A book of prime entry Is designed to show more details relating to each transaction than appears in ledger The main journal used as an essential part of the accounting system is called the general journal In large businesses in addition to the general journal, special journals are also used If a business does not use any special journal, all transactions are entered in the general journal

Prime Entry Book Cash Book

Transactions All cash and bank transactions All credit sales

Source Document Receipts, cash sales invoices, payment vouchers, etc Credit sales invoice

Sales day book/ Sales book/ Sales journal

Purchases day book/ All credit purchases Purchases book/ Purchases journal Sales returns day book/ S.R book/ S.R journal Purchases returns day book/ P.R book/ P.R journal Journal/ General journal All returns out of credit sales All returns out of credit purchases All other transactions

Suppliers Invoice

Credit notes

Debit notes

Debit notes, Credit notes, Minutes of board meetings

Ledger
The main book or device in which all accounts are maintained A small business may need only one ledger In large businesses, it is a common practice to subdivide the ledger
Eg:
Sales Ledger Purchases Ledger General Ledger

The chart of accounts

Serves as an index to the general ledger A list of the titles of the accounts included in the ledger with a number assigned to each account Permits easy reference to accounts which are grouped by five main sections of the general ledger
i:e assets, owners equity, liabilities, revenue and expenses

Accounting Cycle
Chart of Accounts

Opening Balances Closing temporary accounts Analyzing transactions

Preparing financial statements Taking an adjusted trial balance Adjusting ledger accounts Taking a trial balance

Recording transactions In journals

Posting to ledger accounts

Petty Cash Book

Records transactions of the petty cashier The petty cashier is another cashier who makes all petty payments and receives cash only from the main cashier For that reason petty cash book is another cash book