Data Sources, records

and
Books of prime entry

F3 Financial Accounting Presenter: Saqib Khalil 1

 Accounting records
Data sources

Books of prime entry

Double entry

Ledger accounts

Trial balance Year end adjustments

 Inventory
 Accrual & prepayments
 Depreciation
 Bad & doubtful debts
 Correction of errors
Financial statements

F3 Financial Accounting Presenter: Saqib Khalil 2

 Source documents
●
A written offer to provide goods or services
Quotation at a particular price
●
Sent by supplier to potential buyer

●
An order note for goods required from the
supplier
Purchase order ●
Sent by customer to supplier to officially
place the order

●
An order note for goods required by
customer
Sales order ●
Issued by supplier usually sent to
production dept

F3 Financial Accounting Presenter: Saqib Khalil 3

 Source documents cont…

Goods dispatched ●
A list of the goods sent to a customer
note ●
Prepared by the supplier

A list of the goods received from the

Goods received
●

supplier
note ●
Prepared by the recipient business

●
A demand for payment in respect of the
goods supplied
Invoice ●
Issued by supplier and sent to the accounts
dept. of the customer

F3 Financial Accounting Presenter: Saqib Khalil 4

 Source documents cont…
●
A note sent to supplier for the goods
Debit Note returned (purchases returned)
●
It’s a demand for issuance of a credit note

●
A document used to cancel all or part of the
previously issued invoice. For example in case of
Credit Note goods returned by the customer or over invoicing.
●
Issued by supplier and sent to customer.

●
A document accompanying the payment to
Remittance Advice supplier
●
It’s a detail of the invoices being paid

F3 Financial Accounting Presenter: Saqib Khalil 5

 Source documents cont…
●
A note to confirm that the payment has
Receipt been received
●
Issued by supplier

Statement
●
A document listing all the recent
transactions between supplier and the
Or customer
Supplier statement ●
Periodically sent by supplier to customer

F3 Financial Accounting Presenter: Saqib Khalil 6

 Books of prime entry
If ledgers are updated as each transaction took place, accounts
quickly become cluttered, increasing the chances of error, also it
will be difficult to track a transaction.
To avoid this, transactions are first recorded in books of prime
entry.
The details about the transaction available on source document
are recorded in books of prime entry.
Books of prime entry act as source for preparing double entry.
The transactions recorded in day books are totaled periodically
(daily, weekly, monthly depending upon volume of transactions).
This summarized information is posted to ledger accounts via
double entry.

F3 Financial Accounting Presenter: Saqib Khalil 7

 Books of prime entry
Following are the books maintained
Book of prime entry Transaction recoded Source document

Sales day book Credit sales Sales invoice issued

Purchase day book Credit purchases Purchase invoice
received
Sales returns day Return of goods sold on Credit note issued
book credit
Purchase returns day Return of goods Credit note received
book purchased on credit from supplier
Cash book Cash and bank Vouchers, receipts &
transactions cheques
Petty cash book All small cash Petty cash vouchers
transactions
The journal All transactions not No source document
recorded elsewhere but include narrative
F3 Financial Accounting Presenter: Saqib Khalil 8
 Sales day book
Date Invoice Customer Ledger $ Single entry as each
individual
# folio transaction takes
place
1.1.09 00001 Alin RL 1 8,000
Dr Alin a/c 8000
2.1.09 00002 Bell RL 45 3,500
Dr Bell a/c 3500
2.1.09 00003 Cahrly RL 09 1,000
Dr Charly a/c 1000
Total 12,500

Double entry from sales day book

Personal accounts part of

Control account part of double entry
double entry
Dr Receivable ledger control a/c $12500
Dr alin $8000 Cr Sales $12500
Dr bell $3500
Dr charly $1000
Single entry (for amount receivable) will be
Cr Sales $12500
made to update the each of the individual a/c.

F3 Financial Accounting Presenter: Saqib Khalil 9

 Purchase day book
Single entry as each
Date Invoice Supplier Ledger $ individual
# folio transaction takes
place
1.1.09 00012 David PL 1 4,000
Cr David 8,000
2.1.09 00654 Elice PL 45 3,000
Cr Elice 3,000
3.1.09 00524 Graham PL 55 5,500
Cr Graham 5,500
Total 12,500

Double entry from Purchase day book

Personal accounts part of Control account part of double entry

double entry
Dr purchases $12500
Dr purchases $12,500
Cr Payables ledger control a/c $12500
Cr David $4,000
Cr Elice $3,000
Single entry (for amount receivable) will be
Cr Graham $5,500
made to update the each of the individual a/c.

F3 Financial Accounting Presenter: Saqib Khalil 10

 Sales return day book
Single entry as each
Date Credit Customer Ledger $ individual
note # ref. transaction takes
place
1.2.09 CN 001 Alin RL 1 2,000
Cr Alin 2,000
2.2.09 CN 002 Charly RL 09 200
Cr Charly 200

Total 2,200

Double entry from Sale return daybook

Personal accounts part of

Control account part of double entry
double entry
Dr Sales Return $2,200
Dr Sales Return $2,200
Cr Receivable ledger control a/c $2,200
Cr Alin $2,000
Single entry (for amount receivable) will be
Cr Charly $200
made to update the each of the individual a/c.

F3 Financial Accounting Presenter: Saqib Khalil 11

 Purchase return day book
Single entry as each
Date Credit Supplier Ledger $ individual
note # ref. transaction takes
place
2.1.09 00123 Elice PL 45 1,000
Dr Elice $1,000
3.1.09 00789 Graham PL 55 1,500
Dr Graham $1,500

Total 2,500

Double entry - purchase return day book

Personal accounts part of Control account part of double entry

double entry
Dr Payable ledger control a/c $2,200
Dr Elice $1,000
Cr Purchase Return $2,200
Dr Graham $1,500
Single entry (for amount receivable) will be
Cr purchase Return $2,500
made to update the each of the individual a/c.

F3 Financial Accounting Presenter: Saqib Khalil 12

 Cash book
 All transaction involving cash at bank are recoded in cash book. e.g. cash
sales/purchase, expense payments, cash received from/paid to credit
customer/supplier.
 Generally two separate cash books are maintained.
 Cash receipts book
 Cash payments book
 Upon settlement of payable and receivable accounts any settlement discount is
also recorded in cash book

F3 Financial Accounting Presenter: Saqib Khalil 13

 Cash Receipt Book
Date Details Sales Receivable Disc. Bank Single entry as each
individual
allowed transaction takes
place
1.1.09 Alin - 6,000 500 5,500
Cr Alin - bank 5,500
2.1.09 Cash 4,000 - - 4,000 disc all 500
sales
3.1.09 Bell 3,500 300 3,200 Cr Bell-bank 3,200
disc all 300
Total 4,000 9,500 800 12,700

Double entry from Cash receipt book

Dr Bank $12,700
Dr Discount allowed $800
Cr Receivables ledger control a/c $9,500
Cr Sales $4,000

F3 Financial Accounting Presenter: Saqib Khalil 14

 Cash Payment Book
Details Purchases Payable Disc. Rent Bank Single entry as each
individual transaction
Rcvd takes place
Purchase 2,000 - - - 2,000
Graham 5,500 500 - 5,000
Dr Graham–bank 5000
disc rec 500
Rent 1,000 1,000

Total 2,000 5,500 500 1000 8,000

Double entry from Cash payment book

Dr Purchaes $2,000
Dr payable ledger control a/c $5,500
Dr Rent expense $1,000
Cr Discount Received $500
Cr Bank $8,000

F3 Financial Accounting Presenter: Saqib Khalil 15