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Section 3 POA CSEC notes

The document outlines various accounting books used for recording transactions related to purchases, sales, returns, cash movements, and other financial activities. It emphasizes the importance of source documents as evidence of transactions and their role in bookkeeping and auditing processes. Additionally, it explains the double-entry accounting system and the classification of accounts into real, nominal, and personal categories.

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8 views

Section 3 POA CSEC notes

The document outlines various accounting books used for recording transactions related to purchases, sales, returns, cash movements, and other financial activities. It emphasizes the importance of source documents as evidence of transactions and their role in bookkeeping and auditing processes. Additionally, it explains the double-entry accounting system and the classification of accounts into real, nominal, and personal categories.

Uploaded by

neen4h
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Purchases Book/Purchases Day Book/Purchases Journal

- Used to record pruchases of STOCK/INVENTORY/GOODS on credit

Sales Book/Sales Day Book/Sales Journal


- Used to record sales of STOCK/INVENTORY/GOODS on credit

Returns Inwards Book/Returns Inwards Day Book/Returns Inwards Journal


- Used to record Returns by customers of STOCK/INVENTORY/GOODS

Returns Outwards Book/Returns Outwards Day Book/Returns Outwards Journal


- Used to record Returns to suppliers of STOCK/INVENTORY/GOODS

Cashbook - used to record all movements of cash/cheques/bank transactions in and


out of the company

Pettycash book- used to record receipts and disbursements of small amounts of cash
the limit of which is usually based on company policy.

General Journal/The Journal is used to record ALL other transactions that do NOT
belong in any of the other books of original entry
eg..Purchase/Sale of a Fixed Asset on Credit
Writing off of Bad debts
Correction of errors
Opening and Closing entries

What are Source Documents?

Every time a business is involved in a financial transaction, a paper trail is generated. This paper trail is refe
Whether cheques are written to be paid out, sales are made to generate receipts, billing invoices are sent
recorded on an employee's timesheets - all the respective documents are source documents.

Importance of Source Documents

Source documents are, first and foremost, important to the bookkeeping and accounting process because
that a financial transaction actually occurred. Nowadays, these documents do not necessarily need to be a
They may be in a traceable electronic form.

In addition, source documents are also essential in the auditing process. When companies undergo an aud
the auditor’s access to a clear and accessible paper trail of all transactions enhances the overall legitimacy
In order to reaffirm the accuracy of the company’s balances in individual accounts, auditors need full acces
Overall, to run a business more smoothly and enhance transparency, all its source documents should be ke

Sales Invoice- Source document prepared when selling goods either on credit
or for cash with the following details
ENTERED IN THE SALES JOURNAL IF A CREDIT SALE OR
CASHBOOK IF A CASH SALE
DOUBLE ENTRY
Increase Decrease
Assets (own) Debit Credit
Liabilites(owe) Credit Debit
Capital ( owner) Credit Debit
Revenue Credit Debit
Expenses Debit Credit

generated. This paper trail is referred to in accounting as source documents.


eceipts, billing invoices are sent by suppliers, or work hours are
source documents.

and accounting process because they serve as physical evidence


do not necessarily need to be a physical hard copy.

When companies undergo an audit,


enhances the overall legitimacy and independence of the audit.
ccounts, auditors need full access to all the documents.
s source documents should be kept and stored for future reference.

For the buyer the same invoice will be considered a Purchases Invoice and will be entered into
the Purchases Journal if a Credit purchase or the cashbook if a cash purchase

551.56 No entry is made


Less trade discount of 10% (55.16) No entry is made
After the trade discount 496.40 Entered in the books of original entry

Terms of payment : 5/20, n/30


A credit note is raised by the supplier when goods have been returned by the purchaser due to damage, faulty
or expired goods. It is also prepared when an overcharge has been made on an invoice. Credit notes are often
printed in RED to distinguish them from invoices.

A debit note is raised by the purchaser if goods previously bought are to be returned.

Debit and credit notes are entered in the Returns Journals. Stock/Goods/Inventory - As
Purchases -buy stock
Note takes its name from what is done in the PERSONAL account Sales - sell stock
Ret in/Sales Ret- customers return sto
Ret out/Purchases Ret-stock ret to sup

Three Classes of accounts


REAL - Non Current Assets
NOMINAL - Revenues and Expenses
PERSONAL - Debtors and Creditors

A receipt is a source document that acknowledges the receipt of money from a customer
entered in the cashbook
Petty cash voucher is the source document used to make entries in the petty cashbook. Attached
to each voucher must be a receipt as evidence of whatever payment is being re-imbursed.
to damage, faulty
edit notes are often

DR CR
DR Purchases CR Supplier
CR Sales DR Customer
customers return stoDR Ret In CR Customer Credit note
s Ret-stock ret to supCR Ret Out DR Supplier Debit Note

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