+

Books of original entry & ledgersACCN1

+Lesson Objective

Must be able to give a basic description of the different ‘books & ledgers’ used

Should be able to describe the process of recording transactions in a book of original entry

Could be able to explain what each book of original entry is used for as well as justify the need for these books

+Question

If you were going to record the transaction of selling a car to Mr Smith, what details would you want to write down (record)

Make a list of what you would record and why you would need this information.

+Books of original entry

First record of transactions

Separate book for each type of transaction Sales Purchases Cash Returns in etc

Date of transaction (Date order)

Details relating to the sales

Folio column (cross-reference to source document)

Monetary amounts

+What books are used?

Day Books – records the daily transactions Sales day book Purchases day book Returns inwards day book Returns outwards day book

Cash Book – records the receipts & payments of cash & cheques

Journal (General Journal)– all other items not included in the books above

Journal can also be interchanged with the words “day book”

+What are ledgers?

Summary of the day books made each day

Summaries placed in the Ledgers Sales ledger – customer personal accounts Purchase ledger – suppliers personal accounts General ledger – remaining accounts

Expenses Non-current assets Capital

+Flow Diagram

All business transactions

Credit Sales

Credit Purchases

Returns Inwards

Returns Outward

s

Cash receipts & Payments

Other Types

Enter in Sales Day Book

Enter in Purchases Day Book

Enter in Returns inwards

Day Book

Enter in Returns Outward

s Day Book

Enter in Cash Book

Enter in Journal

Enter in double entry accounts in the various ledgers – Sales, Purchases & General Ledger

Classify – put same type of transactions together

+Types of Accounts

Separated into two types of accounts

Personal Accounts – Debtors Creditors

Impersonal Accounts – Real Accounts (possessions)

Buildings Machinery Inventory etc

Nominal Accounts Expenses Income Capital

+Day Books Activity

Pg 14 & 15 of your text book Complete the activity using the template given

Pg 21 of your text book Complete the exam style question using the text book to

help you.

+Cash Book

Type of Ledger

Can be Two or Three column

Contains all details of cash & cheques received

Can be checked against the BANK STATEMENT when received from the bank

+Posting

Completing the entry of transactions into the accounts

“POST” items from sales day book to the sales ledger

“POST” items from cash book to the sales ledger

+Folio Columns

Mentioned before in the Day Books

Details that allow cross-reference to the Double Entry

Details of the name of the book and page number

For Example in the cash book - SL45 – refers to the sales ledger, page 45 In the sales ledger – CB37 – refers to the cash book, page

37

+Discounts allowed/received

Discounts are given for paying an account early

Usually a % of the total amount due

Appears in the “profit & loss” section of the Income Statement

NOT a cost of goods sold

NOT a deduction from the selling price

Discounts ALLOWED – given to the customers

Discounts RECEIVED – given to the business from suppliers

+Adding discounts to the General Ledger

Total of discounts on the receipts side of cash book Enter on DEBIT side of discounts ALLOWED account

Total of discounts on the payments side of the cash book Enter on the CREDIT side of the discounts RECEIVED

account

NOTE that the totals of the discounts are NOT ‘brought down’ in the Cash book as per the cash & bank accounts

+