Books of prime entry: practice questions

How to approach these questions

First decide which book each transaction belongs in, before you write a figure. Read the requirement slowly and underline the key words: bought on credit, sold on credit, returned, paid, received, allowance. Credit purchases of goods for resale go in the purchases day book.

Credit sales of goods go in the sales day book. Goods sent back by customers go in the sales returns day book. Goods you send back to suppliers go in the purchases returns day book.

Anything where money actually moves goes in the cash book. The general journal takes everything that fits nowhere else, such as opening entries, correction of errors and the purchase of non-current assets on credit.

Many questions say "record in the appropriate book and then post to the ledger". Treat these as two separate stages.

Work in date order down the list, one transaction at a time. Ask three questions of each line. Is it a credit transaction or a cash movement?

Is it goods for resale or something else? Who is the other party?

If it is not credit, not cash and not goods for resale, it is almost always a general journal item. This sieve stops you putting a credit purchase of a delivery van in the purchases day book. A van is a non-current asset, not goods for resale.

Lay out each book with a heading, a date column, a details column, a folio column and an amount column. In the purchases and sales day books, list the net amounts and total them at the end of the period. Post the total to the nominal ledger.

Post each individual amount to the personal account of the supplier or customer. Work out the trade discount before you enter the figure. The day book records the amount after trade discount but before any cash discount.

A list price of RM800 less 25% trade discount is RM600, and RM600 goes in the book. Show the RM200 deduction in your working.

Keep the double entry watertight when you post. Each personal account gets its own entry. The journal total goes to the nominal account.

The purchases day book total is debited to the purchases account, and the individual supplier accounts are credited. The sales day book total is credited to the sales account, and the individual customer accounts are debited. Returns reverse these directions.

In the details column, write the name of the other account, such as "Sales" in the customer's account. That lets the examiner trace the transaction both ways.

Test the accounting logic as you check. Every credit sale should increase a customer's debit balance and increase sales. Every payment should reduce a balance.

Add the totals a second time, because a miscast total flows into the ledger and then the trial balance. Your day book totals also feed control accounts later, so they must be right first time.

Avoid these traps. Cash sales and cash purchases do not go in the sales or purchases day books, which are for credit transactions only. Do not confuse the two returns books, because they move in opposite directions.

Discounts allowed and received are recorded in the cash book, not the day books. The general journal always needs a narrative, a one-line explanation under the double entry, and leaving it out costs a mark. Keep goods for resale apart from expenses and assets.

Stationery bought on credit is an expense recorded through the journal, not a purchase. Treating it as a purchase inflates cost of sales.

If you often place transactions in the wrong book, one of our teachers can sort a set of past-paper transactions with you until choosing the book becomes automatic. Book a trial class