Recording daily details: books of prime entry

Double entry accounts are kept in the ledger, but daily details of transactions are not normally entered directly into it; it would become too cluttered and difficult to use. For convenience we first of all enter all the day-to-day details of transactions in other books, called books of prime entry. In modern accounting these books are the:

• purchase day book
• purchase returns day book
• sales day book
• sales returns day book
• journal
• cash book
• petty cash book.

Day books or journals

This group of books can also be called either day books or journals. We will use the term day books here for the four which are identically ruled and most often referred to as day books, that is the purchase day book, purchase returns day book, sales day book and sales returns day book. The word journal we will keep for the journal proper, because of its individual ruling and the others we will call ‘books of prime entry’. It is the four day books as defined here, that we will explain in this section.

Source documents for the book-keeper

The sources of information we need to enter into the day books are invoices and credit notes. When a firm receives invoices or credit notes for goods it has purchased they are known as purchase invoices and credit notes inwards respectively. When it sends them out, they are called sales invoices and credit notes outwards. Whether the documents refer to sales or purchases, their format is basically the same. After all, what is a purchase invoice to one party in the transaction is a sales invoice to the other, and similarly for credit notes.

Debit notes

Sales office clerks occasionally make mistakes and undercharge a customer for goods, so firms usually print the term E&OE on their invoices, which means errors and omissions excepted. This means the firm reserves the right to ask for more money for the goods if they realise they have inadvertently undercharged. If this has to be done the document they use is known as a debit note. An example is given in figure 5 opposite.

Book-keeping and confidentiality

Book-keeping and accounting technicians have a duty to treat all information to which their job exposes them in strictest confidence, disclosing details only to those who have a professional right to know them. Examples are:

• employers, or employees who need the information to carry out their professional role;
• professionals outside the company who work on behalf of the company who need the information to carry out their function;
• any other person to whom their employer, or officer senior to themselves instructs them to disclose information, since it must be assumed that the employer or senior officer will also be working within the confines of such confidentially rules.

A. Frazer, a retail stationer, makes the following purchases during the month of April 200X:

200X

Figure 6 shows how he writes up the transactions in the purchase day book.