1. Books of original entry & ledgers
ACCN1

2. 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

3. 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.

4. 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

5. 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”

6. 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

7. Flow Diagram All business transactions
Classify – put same type of transactions together
Credit Sales
Credit Purchases
Returns Inwards
Returns Outwards
Cash receipts & Payments
Other Types
Enter in Sales Day Book
Enter in Purchases Day Book
Enter in Returns inwards Day Book
Enter in Returns Outwards Day Book
Enter in Cash Book
Enter in Journal
Enter in double entry accounts in the various ledgers – Sales, Purchases & General Ledger

8. 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

9. 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.

10. 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

11. 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

12. 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

13. 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

14. 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