Accounting

Contra entries are unique accounting entries that affect both sides of the cash book—the cash and bank columns—simultaneously. These transactions occur when money is transferred between a company’s cash and bank accounts, such as depositing cash into the bank or withdrawing cash from the bank for office use. Contra entries are essential for maintaining accurate records of internal fund movements without affecting the overall financial position of the business. 1. What Are Contra Entries?… Read more

The Purchase Ledger, also known as the Bought Ledger or Accounts Payable Ledger, is a subsidiary ledger that records all transactions related to credit purchases made by a business. It contains individual accounts for each supplier from whom goods or services have been purchased on credit. The Purchase Ledger plays a crucial role in tracking amounts owed to suppliers, managing payment schedules, and maintaining healthy supplier relationships. 1. What Is the Purchase Ledger?… Read more

The Purchase Day Book, also known as the Purchases Journal, is a book of prime entry used to record all credit purchases of goods and services intended for resale or production. It does not include cash purchases, which are recorded in the Cash Book. The Purchase Day Book helps businesses systematically track their credit purchases and manage their payables effectively. 1. What Is a Purchase Day Book? The Purchase Day Book is a specialized journal that records all transactions where goods or services are purchased on credit.… Read more

The Sales Ledger, also known as the Debtors’ Ledger or Accounts Receivable Ledger, is a subsidiary ledger that records all transactions related to credit sales made by a business. It contains individual accounts for each customer who has purchased goods or services on credit. The Sales Ledger plays a critical role in tracking amounts owed by customers, monitoring payment histories, and managing receivables. 1. What Is a Sales Ledger? The Sales Ledger is a detailed record of all credit transactions between a business and its customers.… Read more

The Sales Day Book, also known as the Sales Journal, is a book of prime entry used to record all credit sales of goods and services made by a business. It serves as the first point of entry for credit sales transactions before they are posted to the respective customer accounts in the Sales Ledger. The Sales Day Book plays a critical role in maintaining organized financial records and helps businesses keep track of their receivables.… Read more

The Petty Cash Book is a specialized book of prime entry used to record small, day-to-day expenditures that are too minor to warrant separate ledger entries. These transactions typically include expenses like office supplies, postage, transportation, and other minor operational costs. The petty cash book helps businesses manage these small transactions efficiently without cluttering the main cash book. 1. What Is a Petty Cash Book? A Petty Cash Book is a subsidiary ledger that records all minor cash payments made from a petty cash fund.… Read more

The Total Cash Account in the Nominal Ledger represents the consolidated record of all cash transactions within a business, including both cash receipts and cash payments. This account forms part of the general ledger and provides a comprehensive overview of the company’s cash position over a specific period. Unlike the cash book, which records individual cash transactions in detail, the total cash account summarizes these transactions for financial reporting purposes. 1.… Read more

The Cash Book is a fundamental component of ledger accounting that records all cash and bank transactions of a business. It serves both as a book of prime entry and as part of the general ledger, meaning transactions are first recorded here before being posted to other ledger accounts. The cash book plays a crucial role in tracking the inflow and outflow of cash, ensuring accurate financial management and reporting. 1.… Read more

A Book of Prime Entry, also known as a Book of Original Entry, is the first place where financial transactions are recorded in the accounting cycle. These books serve as the initial documentation of all business activities, capturing transactions in chronological order based on source documents like invoices, receipts, credit notes, and bank statements. The entries from these books are later transferred to the appropriate ledger accounts for classification and summarization.… Read more

The Books of Prime Entry, also known as the Books of Original Entry, are the first point of recording financial transactions in the accounting cycle. These books capture business transactions in chronological order before they are posted to the ledger accounts. They play a vital role in maintaining accurate and organized financial records, ensuring that each transaction is correctly classified and easily traceable. 1. What Are Books of Prime Entry? The Books of Prime Entry are specialized journals where transactions are initially recorded based on source documents such as invoices, receipts, and credit notes.… Read more