C hapter 11: Division of the ledgers:

Books of original entry

Contents of chapter
This chapter covers the break-up of the ledger into many different books for different purposes.

Notes for teachers

The need for extra books is to enable more than one person to be able to work on the accounts at the
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same time. By dividing transactions into different types, the accounts clerks can be more specialised in
their work.

A book of original entry is a collection point for information about transactions of a particular type, e.g.
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credit sales in a sales journal. Obviously it does not have to be a bound book. It could be contained on
cards or on loose sheets.

It is important for students to understand the source documents for entry in the books. These are:
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Book Source documents
Sales journal Sales invoices
Purchases journal Purchases invoices
Returns inwards journal Credit notes
Returns outwards journal Debit notes
Cash book Cheque counterfoils and payment advices, pay-in slips, bank statements
The journal Letters, memos, faxes, e-mails, capital goods invoices and other data

4 The term ‘source documents’, for the items in note 3 above, is being used more and more in examinations
across the world. Students must realise that if they are asked for a source document, then that refers to
one of the documents above. Otherwise they may think it is something they have never been taught.

Other than the cash book, the other books of original entry are not part of double entry. They are simply
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lists of transactions.

To complete double entry, the totals of the period’s transactions are entered in appropriate accounts,
e.g. total purchases entered as a debit in the purchases account in the general ledger.

6 There is no need to enter details as to what has been sold in the sales journal, or the nature of the
purchases in the purchases journal. If we want to know that, we can look at the copy of the invoices
which will have been filed.

Students should remember that transactions are first recorded in books and then posted to ledgers.
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Answers to MCQs
11.1 A 11.2 C 11.3 D 11.4 A 11.5 C

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