Topic 2 of 6 · Form 3
Sources and recording of data
Invoice, credit note, debit note, statement of account, cheque counterfoil, paying-in slip, receipt, petty cash voucher; trade discount and cash discount.
Notes for this topic 1 file, in order
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Business documents
Invoice, credit note, debit note, statement of account, cheque counterfoil, paying-in slip, receipt, petty cash voucher; trade discount and cash discount.
Books of prime entry
Sales journal, purchases journal, sales returns and purchases returns journals, cash book (two-column: cash and bank; three-column includes discount), petty cash book (imprest system) and general journal.
Double entry
Debit the account receiving value; credit the account giving value. Divisions of the ledger: sales (receivables) ledger, purchases (payables) ledger and nominal (general) ledger.
Worked example: Record the sale of goods on credit to Kudzai for US$400 less 25% trade discount.
Invoice value = 400 × 0.75 = US$300 → Dr Kudzai 300; Cr Sales 300
Worked example: Kudzai pays the amount less 5% cash discount by cheque.
Discount 15 → Dr Bank 285; Dr Discount allowed 15; Cr Kudzai 300
Balancing accounts
Total each side, insert the balance carried down on the smaller side, and bring it down on the opposite side.
Check yourself
- Which book of prime entry records credit purchases of goods?
- What does the imprest system mean?
- Is discount received an income or an expense?
Show answers
- The purchases journal.
- The petty cashier is reimbursed with the exact amount spent, restoring a fixed float.
- Income.
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