Books of first entry (books of prime entry) are the books in which a transaction is recorded for the very first time, based on a source document such as an invoice or receipt. Entries are then posted from here into the ledger.
Types of books of first entry
- General Journal — transactions not suited to other journals (opening entries, buying/disposing of assets on credit).
- Sales Journal — credit sales of goods only.
- Purchases Journal — credit purchases of goods only.
- Returns Inwards Journal — goods returned by customers.
- Returns Outwards Journal — goods returned to suppliers.
- Cash Book — all cash and bank receipts and payments.
- Petty Cash Book — small routine payments.
Key idea
A transaction is entered first in a book of first entry, then posted to the ledger using the double-entry system.
Purpose
These books reduce the number of entries in the ledger, group similar transactions together, and make checking easier. The Cash Book is special because it acts as both a book of first entry and part of the ledger.
Example
Aiman's shop sells goods worth RM800 on credit to Ms Lina. The sale is first recorded in the Sales Journal, then posted: debit Lina's account, credit the Sales account.
The recording flow
Every transaction begins with a source document, is then written up in the appropriate book of first entry, and is finally posted to the ledger. This staged system means each entry can be traced back to its evidence. By grouping similar transactions in one book, a business can total them quickly each day or month and reduce the risk of errors when posting.
Remember
CASH sales/purchases do not go into the Sales/Purchases Journal — they are recorded in the Cash Book.