Books of Prime Entry and Source Documents
What the exam tests
This domain tests the purpose of day books, the cash book and the general journal, and how source documents support entries. Expect questions on which book records a transaction and how totals are posted.
Core rules
- Source documents include sales invoices, purchase invoices, credit notes, debit notes, receipts, petty cash vouchers and bank statements.
- The sales day book records credit sales only; cash sales go in the cash book.
- The purchase day book records credit purchases of goods for resale.
- The sales returns day book records credit notes issued to customers; the purchase returns day book records credit notes received.
- The general journal records non-routine entries such as corrections, opening entries and asset purchases on credit.
Worked example
Credit sales invoices of 1,200 and 800 are issued, and a credit note of 100 is issued. The sales day book total is 2,000, posted as Dr Receivables 2,000; Cr Sales 2,000. The credit note is recorded in the sales returns day book and posted as Dr Sales returns 100; Cr Receivables 100. Net receivables increase by 1,900. The invoice supports the sale; the credit note supports the return.
Traps
Do not record cash sales in the sales day book. Do not net credit notes inside the sales day book if the exam expects separate returns day book treatment. Do not post every individual invoice to the nominal ledger when the day book total is posted; individual entries go to receivables or payables ledgers. Do not treat a debit note as a sales invoice.
Key points
- Day books record credit transactions only, except the cash book.
- Sales returns and purchase returns have separate day books.
- Source documents provide evidence for entries.
- Totals, not individual invoices, are usually posted to nominal ledger accounts.