Page 53 - Book-keeping for Secondary Schools Student’s Book Form One

Recording of business transactions

any transaction for the first time. In the (e) Cash book, and
books of prime entry, each transaction (f) General journal (journal proper).
is recorded with as much detail as
possible, in order to provide information Use of books of prime entry
concerning the transaction. The name As already explained, there are six types
journal is adopted from a French word of books of prime entry. As their names
FOR ONLINE READING ONLY
for diary. It is therefore, a good practice suggest, each book serves its own purpose.
to record transactions in the books of The following are brief descriptions and
prime entry in a chronological order. purpose of each of the book of prime
Transactions are also recorded as soon entry:
as possible from the time they occur
to avoid situations where they may be Purchases daybook (purchases journal)
forgotten or have their source documents The purchases daybook is used to record
misplaced. For example, suppose Eliza transactions related to credit purchases of
sold three office chairs to Abraham for
TZS 100,000 per office chair on credit. goods. In other words, this journal is used
In this case, Eliza is expected to record to record details of goods bought by the
that she sold three office chairs for TZS business with the promise that payment
100,000 each to Abraham on credit. Eliza will be made in the future. Cash purchases
is also expected to record the address and of goods are not recorded in this book.
contact information of Abraham and the
date of the transaction. She would also Sales daybook (sales journal)
record the details of the invoice issued to The sales daybook is used to record
Abraham. transactions related to credit sales of
goods. This journal is used to record
Types of books of prime entry details of goods sold on credit with the
Books of prime entry are also known as promise that payment will be received
journals or day books, except for a cash in the future. Cash sales of goods are not
book. These books are commonly termed recorded in this book.
as special journals or daybooks because
they are used to record transactions of
specific type on the daily basis. There Sales returns daybook (sales returns
are six types of books of prime entry as journal)
presented below: This daybook is used to record details of
(a) Sales journal (sales daybook), transactions related to sales returns, or
(b) Purchases journal (purchases returns of goods from customers to whom
daybook), goods were sold on credit (debtors). Each
(c) Sales returns journal (sales returns entry made include details of the goods
daybook), and the credit note, the name of customer
(d) Purchase returns journal (purchase (debtor) and the amounts involved.
returns daybook),

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