ZIMSEC O Level · Principles of Accounts · Form 3
Source documents
- Invoice: sent by the seller for credit sales; shows goods, prices and trade discount.
- Credit note: sent by the seller when goods are returned or overcharged.
- Debit note: sent by the buyer to request a credit note.
- Receipt: proof of payment received. Cheque counterfoil and bank paying-in slip.
- Statement of account: summary of transactions with a customer for a month.
Books of original entry
Transactions are first recorded in journals before posting to the ledger:
- Sales journal (credit sales, from invoices sent).
- Purchases journal (credit purchases, from invoices received).
- Sales returns journal (credit notes sent) and purchases returns journal (credit notes received).
- Cash book (cash and bank transactions).
- General journal (anything else: opening entries, purchase of non-current assets on credit, corrections).
Discounts
- Trade discount: a reduction for trade buyers; never recorded in the accounts.
- Cash discount: for paying promptly; recorded as discount allowed (expense) or discount received (income).
Exam tip: Credit sales of GOODS go to the sales journal; credit purchase of a non-current asset goes to the general journal.
Check yourself
- Which document does a seller send when goods are returned?
- In which book is the credit purchase of goods first recorded?
- Is trade discount entered in the ledger?
Show answers
- A credit note.
- The purchases journal.
- No – only the net amount is recorded.
Questions about this topic (0)
No questions about this topic yet.
Sign in or create a free account to join in.