Chapter 2 The Accounting System

The accounting system

Chapter 2

Wood/Robinson: Book-keeping and Accounts, 7e, © T. Sijtsma 2009

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Books of original entry Sales day book

for credit sales

Purchases day book

for credit purchases

Sales returns day book

for returns inwards

Purchases returns day book

for returns outwards

Cash book

for receipts and payments of cash and cheques

General journal

for all items

Petty cash book

for (small) petty payments

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Types of ledgers The different types of ledgers most businesses use are: Sales ledger – for customers’ personal accounts Purchases ledger – for suppliers’ personal accounts General ledger – for all remaining double entry accounts

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Using more than one ledger

Main reason of using more than one ledger is: To allow different members of staff the ability to record transactions at the same time.

Wood/Robinson: Book-keeping and Accounts, 7e, © T. Sijtsma

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A diagram of the books commonly used All business transactions

Classify – put same types of transactions together

Credit Sales

Credit Purchases

Sales returns

Purchases returns

Cash Receipts and Payments

Other types

Enter in Sales Day Book

Enter in Purchases Day Book

Enter in Sales Returns Day Book

Enter in Purchases Returns Day Book

Enter in Cash Book

Enter in General journal

Enter in double entry accounts in the various ledgers • Sales ledger • Purchases ledger • General ledger

Wood/Robinson: Book-keeping and Accounts, 7e, © T. Sijtsma

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Types of accounts

Accounts

Personal accounts

Debtors’ accounts

Creditors’ accounts

Impersonal accounts

Real accounts, for property of all kinds

Wood/Robinson: Book-keeping and Accounts, 7e, © T. Sijtsma

Nominal accounts, for expenses, income and capital

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End of Chapter 2

Wood/Robinson: Book-keeping and Accounts, 7e, © T. Sijtsma 2009

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