CDA COLLEGECDA COLLEGE

ACC101: INTRODUCTION TO ACC101: INTRODUCTION TO ACCOUNTINGACCOUNTING

Lecture 7Lecture 7

Lecturer: Kleanthis Zisimos Lecturer: Kleanthis Zisimos

Lecture Topic ListLecture Topic List

Books of prime entryBooks of prime entry Cash BookCash Book Petty Cash BookPetty Cash Book Sales and Purchases BookSales and Purchases Book JournalJournal

Books of Prime EntryBooks of Prime Entry

The Books of prime entry are the books in The Books of prime entry are the books in which we first record the transactionswhich we first record the transactions

The main books of prime entry areThe main books of prime entry are

1.1. Sales day book and sales return day bookSales day book and sales return day book

2.2. Purchases and purchases return day bookPurchases and purchases return day book

3.3. Cash book Cash book

4.4. Petty cash book Petty cash book

5.5. JournalJournal

Cash BookCash Book

The cash book includes the accounts ofThe cash book includes the accounts of CashCash BankBank Discount allowedDiscount allowed Discount receivedDiscount received

Bank & Cash receiptsBank & Cash receipts

Receipts are posted on the debit site Receipts are posted on the debit site of the bookof the book

Discounts allowed are also posted on Discounts allowed are also posted on the debit sitethe debit site

Deposits from cash are posted as Deposits from cash are posted as contra entries contra entries

Bank & Cash paymentsBank & Cash payments

Payments are posted on the credit Payments are posted on the credit site of the booksite of the book

Discounts received are also posted Discounts received are also posted on the credit siteon the credit site

Except cash payments and check Except cash payments and check payment we record also payment we record also

Standing ordersStanding orders Credit transfersCredit transfers

The form of a cash bookThe form of a cash book

Date Description Folio Disc cash bank Date Description Folio Disc Date Description Folio Disc cash bank Date Description Folio Disc cash bankcash bank

allowed receivallowed receiv

Petty cash bookPetty cash book

In the big companies a petty cash book is In the big companies a petty cash book is used for posting small amounts. used for posting small amounts.

An assistant accountant is assigned to post An assistant accountant is assigned to post the transactions so that the senior the transactions so that the senior accountant can work only with important accountant can work only with important amounts of money.amounts of money.

At the end of each month the assistant At the end of each month the assistant accountant groups similar expenses to accountant groups similar expenses to specific accounts and the senior accountant specific accounts and the senior accountant posts in the ledger only the summarized posts in the ledger only the summarized amounts.amounts.

Imprest SystemImprest System

For better control the assistant accountant For better control the assistant accountant usually opens his petty cash book in the usually opens his petty cash book in the beginning of each month by the same beginning of each month by the same amountamount

This is achieved because at the end of This is achieved because at the end of each month, the senior accountant each month, the senior accountant replaces the total amount paid by the replaces the total amount paid by the same amount.same amount.

The form of a petty cash bookThe form of a petty cash book

Receipts Date Description No Payments Group 1 Group 2 Group Receipts Date Description No Payments Group 1 Group 2 Group 33

Sales Day BookSales Day Book In the sales day book we record all transactions of In the sales day book we record all transactions of

credit salescredit sales Example of a sales day book is the followingExample of a sales day book is the following

Date Invoice Customer SL no. AmountDate Invoice Customer SL no. AmountJan 10 247 Jones SL 34 107Jan 10 247 Jones SL 34 107Jan 10 248 Smith Sl 50 234Jan 10 248 Smith Sl 50 234Jan 10 249 Alex Sl 12 567Jan 10 249 Alex Sl 12 567

The column SL no is a reference to the sales LedgerThe column SL no is a reference to the sales Ledger

Purchases Day BookPurchases Day Book

In the purchases day book we record all In the purchases day book we record all transactions of credit purchasestransactions of credit purchases

Date Customer PL no. Date Customer PL no. € Purchases € Purchases otherother

Jan 10 Jones PL 34 107 107Jan 10 Jones PL 34 107 107Jan 10 Smith Pl 50 234 234Jan 10 Smith Pl 50 234 234Jan 10 Alex Pl 12 567 564 Jan 10 Alex Pl 12 567 564

The column PL no is a reference to the The column PL no is a reference to the Purchases LedgerPurchases Ledger

Sales returns and Purchases Sales returns and Purchases returns Day Book,returns Day Book,

In the sales returns day book we In the sales returns day book we record all transactions of goods record all transactions of goods returned by the customerreturned by the customer

In the purchases returns day book In the purchases returns day book we record all transactions of goods we record all transactions of goods returned to suppliersreturned to suppliers

Journal Entries and PostingJournal Entries and Posting

A journal gives a complete record of each transaction in one A journal gives a complete record of each transaction in one place. It also shows debits and credits of each transaction. place. It also shows debits and credits of each transaction. The process of recording transactions in a journal is called The process of recording transactions in a journal is called journalizing.journalizing.

A journal includes information like the date of transaction, A journal includes information like the date of transaction, titles of affected accounts, debit and credit amounts and titles of affected accounts, debit and credit amounts and explanations of the transaction.explanations of the transaction.

The process of transferring journal entry information to the The process of transferring journal entry information to the ledger is called postingledger is called posting

The JournalThe Journal

The journal is one of the books of prime The journal is one of the books of prime entry. It is used to record any double entry. It is used to record any double entries which don not arise from the other entries which don not arise from the other books of prime entrybooks of prime entry

The format of a journal entry isThe format of a journal entry is

Debit CreditDebit Credit

Date Account 1 XDate Account 1 X

Account 2 XAccount 2 X

DescriptionDescription

Discussion question 1Discussion question 1

Post the following transactions in the Post the following transactions in the journal of the hairdressing company ‘Fiona’journal of the hairdressing company ‘Fiona’

1 January. Put cash of 1 January. Put cash of € € 2000 as capital2000 as capital

Purchased brushes for cash Purchased brushes for cash € € 5050

Purchases hair driers Purchases hair driers € € 150 by credit150 by credit

30 January. Paid rent 30 January. Paid rent € € 300300

Received Received € € 100 from creditor100 from creditor

Made a haircut for Made a haircut for € € 20 in cash20 in cash