1. ACC101: INTRODUCTION TO ACCOUNTING
CDA COLLEGE
ACC101: INTRODUCTION TO ACCOUNTING
Lecture 7
Lecturer: Kleanthis Zisimos

2. Lecture Topic List Books of prime entry Cash Book Petty Cash Book
Sales and Purchases Book
Journal

3. Books of Prime Entry
The Books of prime entry are the books in which we first record the transactions
The main books of prime entry are
Sales day book and sales return day book
Purchases and purchases return day book
Cash book
Petty cash book
Journal

4. Cash Book The cash book includes the accounts of Cash Bank
Discount allowed
Discount received

5. Bank & Cash receipts Receipts are posted on the debit site of the book
Discounts allowed are also posted on the debit site
Deposits from cash are posted as contra entries

6. Bank & Cash payments
Payments are posted on the credit site of the book
Discounts received are also posted on the credit site
Except cash payments and check payment we record also
Standing orders
Credit transfers

7. The form of a cash book
Date Description Folio Disc cash bank Date Description Folio Disc cash bank
allowed receiv

8. Petty cash book
In the big companies a petty cash book is used for posting small amounts.
An assistant accountant is assigned to post the transactions so that the senior accountant can work only with important amounts of money.
At the end of each month the assistant accountant groups similar expenses to specific accounts and the senior accountant posts in the ledger only the summarized amounts.

9. Imprest System
For better control the assistant accountant usually opens his petty cash book in the beginning of each month by the same amount
This is achieved because at the end of each month, the senior accountant replaces the total amount paid by the same amount.

10. The form of a petty cash book
Receipts Date Description No Payments Group Group Group 3

11. Sales Day Book
In the sales day book we record all transactions of credit sales
Example of a sales day book is the following
Date Invoice Customer SL no Amount
Jan Jones SL
Jan Smith Sl
Jan Alex Sl
The column SL no is a reference to the sales Ledger

12. Purchases Day Book
In the purchases day book we record all transactions of credit purchases
Date Customer PL no € Purchases other
Jan 10 Jones PL
Jan 10 Smith Pl
Jan 10 Alex Pl
The column PL no is a reference to the Purchases Ledger

13. Sales returns and Purchases returns Day Book,
In the sales returns day book we record all transactions of goods returned by the customer
In the purchases returns day book we record all transactions of goods returned to suppliers

14. Journal Entries and Posting
A journal gives a complete record of each transaction in one place. It also shows debits and credits of each transaction. The process of recording transactions in a journal is called journalizing.
A journal includes information like the date of transaction, titles of affected accounts, debit and credit amounts and explanations of the transaction.
The process of transferring journal entry information to the ledger is called posting

15. The Journal
The journal is one of the books of prime entry. It is used to record any double entries which don not arise from the other books of prime entry
The format of a journal entry is
Debit Credit
Date Account X
Account X
Description

16. Discussion question 1
Post the following transactions in the journal of the hairdressing company ‘Fiona’
1 January. Put cash of € 2000 as capital
Purchased brushes for cash € 50
Purchases hair driers € 150 by credit
30 January. Paid rent € 300
Received € 100 from creditor
Made a haircut for € 20 in cash