Books of original entry and ledgers

6 important questions on Books of original entry and ledgers

What is book of original entry?

The books in which we first record transactions. They are also known as either day books or journals. There is a separate book for each transaction.

Which journals or day books do you have?

- Sales day book --> for credit sales
- Purchases day book --> for credit purchases
- Returns inwards day book --> for returns inwards
- Returns outwards day book --> for returns outwards
- Cash book --> for receipts and payments of cash and cheques
- General Journal or Journal --> for other items

Which types of ledgers are used by most businesses?

- Sales ledger --> the accounts receivable
- Purchases ledger --> the accounts payable
- General ledger --> the remaining double entry accounts, such as relating to expenses, non-current assets and capital
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Which types of accounts are there?

  • Personal accounts --> for debtors and creditors
  • Impersonal accounts
       - Real accounts --> accounts in which possessions are recorded
       - Nominal accounts --> accounts in which expenses, income and capital are recorded

What is the nominal ledger?

The ledger in which the impersonal accounts are kept

What is the private ledger?

A ledger in which the capital, drawings and other similar accounts are kept for privacy.

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