Theory question 101
Books of Original Entry(a) Identify the book of original entry in which each of the following transactions will be recorded.
(i) purchase of office equipment on credit; (ii) credit purchases; (iii) bank charges; (iv) goods returned by a customer.
(b) State one source from which each of the following items could be transferred into purchases ledger control account:
(i) purchases; (ii) cash payments; (iii) returns outwards; (iv) discount received; (v) petty cash payments.
(c) Explain the following types of ledgers.
(i) sales ledger; (ii) purchases ledger; (iii) general ledger.
Show the model answer
(a) (i) Journal proper (general journal); (ii) purchases journal (day book); (iii) cash book; (iv) returns inwards (sales returns) journal.
(b) (i) Purchases journal; (ii) cash book; (iii) returns outwards journal; (iv) cash book (discount received column); (v) petty cash book.
(c) (i) Sales ledger: holds the personal accounts of credit customers (debtors).
(ii) Purchases ledger: holds the personal accounts of credit suppliers (creditors).
(iii) General (nominal) ledger: holds all other accounts – real accounts (assets), nominal accounts (income and expenses), capital and liabilities.
Match each transaction to the book where it is first written.