Question

In: Accounting

6. Explain the use of any five books of original entry?

6. Explain the use of any five books of original entry?

Solutions

Expert Solution

Books of Original Entry are nothing but accounting books or journals where all transactions are initially recorded. These are specific accounting journals for double entry book keeping for different categories of transactions.

Following are generally recorded in Books of Original Entry :

1. Date of transaction.

2. Details relating to transactions, i.e., the second aspect of transactions, e.g., name of trade receivable in sales journal

3. Monetary amount of the transactions

4. References to the relevant ledger account (i.e. Ledger Folio)

5. References to original source documents, e.g., invoice number (i.e. Voucher No.)

Uses of 5 types of Books of Original Entry are :

1. Sales Day Book : Sales day book or sales journal is used to record all credit sales made by the entity. It records details of Customer/Debtors, Trade discount given, Final Invoice Amount, etc.

2. Purchase Day Book : Purchase day book or Purchase Journal is used to record all credit purchases made by the entity. It records details of Supplier, trade discount received, goods received, etc.

3. Cash Book : Cash book is used to record all cash and bank related transactions including cash sales and cash purchases. It also records Cash Discount received and given.

4. General Journal : It is used to record the transactions not recorded in special journals as mentioned above. Example : To record Depreciation on Machinery, General Journal is used.

5. Return Inwards journal/ Return Outward Journal : Return Inward journal is used to record sales returns, while return outward journal is used to record Purchase returns.


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