What are books of accounts
The books of account are mainly consist of books of primary entry and ledger which contains the individual account. The primary books enter the transaction in first place where the ledger are used to classify the information.
Purpose of Primary books of accounts
The primary books of account are maintained for the following advantages1. Sequential Check
Primary books of account are important sequential check that all transaction has been recorded in the books of accounts. The books can be checked any time with source document to detect unrecorded transaction.
2. facilitate Classification
Primary books of account make it easier to classify the transaction. Direct classification require special skill and experience.
Types of Prime entry books
Mainly there are two types of journal i.e General Journal and Special Journal. The first type is used in small organization where volume of transaction is not higher and therefor all Journal transaction are recorded in a single book.
Special journal is used where volume of some transactions are very high like sales and purchase. Therefore separate Journals are used to record those transactions. The special journal facilitate the management in many ways.
Special journal is used where volume of some transactions are very high like sales and purchase. Therefore separate Journals are used to record those transactions. The special journal facilitate the management in many ways.
How many books will be maintained by the management mainly depends on the volume of transaction and nature of business. The below is primary books of entries also known as special Journals.
- Sales Day book record the credit sales only
- Sales Return Day book record the sales return by the customer
- Purchase Day Book record the credit purchases
- Purchase Return Day book record the purchases return to supplier
- Cash Book record all the cash transaction
- Petty cash book is used for small cash payments
- Journal is used for adjustment and correction
Column of Sales Day Book and other books
The typically the sales day book have six columns that includes the date, invoice number , customer name, net amount , sales tax and Gross amount. The purchase day book also contains the same column number of column and customer column is replaced by supplier column. Similarly the sales return and purchase return books contains the same information.
Purpose of using several prime entry books
1. Control Account
The entry in the control account is facilitated with the help of special journals. it is really time consuming to collect required information from General journal to update control accounts.
2. Better Control
Number of primary book improve management control over transaction processing and the work load can be divided among different staff member . for example one person is responsible for maintaining the sales journal and other is for maintaining the purchase Journals.
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