All the business transaction is initially recorded in sources of documents. Records of these transactions are made in books of prime entry.

What Is A Source Document In Accounting

A source document is the source of all information and records that are recorded by an accountant in the business. This document contains all the necessary information and details about the business transactions.

A source document keeps very important information about the transaction as it is very helpful to identify the event that took place in the business. Information that it contains,

  • Name of the person or party who did the transaction
  • How much amount is paid
  • On which date transaction takes place
  • And the subject of the transaction etc

What Are The Books Of Prime Entry

Books of prime entry are the books where different natures of transactions are recorded, the followings are the types of books of prime entry,

  1. Sales day book
  2. Sales return day book
  3. Purchase day book
  4. Purchase return day book
  5. Cash book
  6. Petty cash book
  7. Journals

These 7 books of prime entry play a vital role in overall the business, whether a small business or a large one, every business needs these 7 books of prime entry in their business for recording the events.

Sales Day Book

The sales day book is used to write those transactions which take place on credit. A credit sales invoice or credit notes (sent) documents are used to record in the sales day book.

Sales Return Day Book

When customers return goods for some reason, those returns are recorded in the sales return day book. Sales return and credit notes (received) are used to record the transactions in the sales return day book.

Purchase Day Book

The purchase day book is the record of all received invoices by the suppliers. Credit purchase invoices and credit notes invoices are used to record these transactions in the purchase day book.

Purchase Return Day Book

The purchase return day book is kept to record credit notes received in respect of goods which is returned by a business or by a customer.

Purchase returns and credit notes received are the documents that are recorded in the purchase return day book.

Cash Book

The cash book is the book of prime entry which keeps a cumulative record of money received and money paid out by the business via its bank account or on cash. Cash-paid invoices and receipts are recorded in the cash book.

Petty Cash Book

Most businesses keep a small amount of cash on the premises to make occasional small payments in cash. Petty cash means a small transaction in a business. Notes and coins paid documents are used to record in petty cash.

Journal Book

Those entries which do not fit on the above books of prime entry are recorded in the journal book.

Adjustment entries are used to record in the journal book.

Importance Of Books Of Prime Entry In Business

Books of prime entry are the source of all business transactions and events. It is very important in a business as it is used to post transactions and verify them with the help of sources document.

Keeping books of prime entry plays a golden role in the verification of payments and receipts.

Practice Questions Of Books Of Prime Entry

State which books of prime entry the following transaction will be entered into.

  1. Your business pay Naveen (a supplier) $500
  2. You send Naveen (a customer) an invoice for $600
  3. Naveen pays you $500
  4. You pay Naveen $500
  5. Naveen (a customer) returns goods for $250
  6. You return goods to Naveen (a supplier) for $500
  7. Receive an invoice from Naveen for $400
  8. You received a payment from an unknown client


  1. Cash book
  2. Sales day book
  3. Cash book
  4. Cash book
  5. Sales return day book
  6. Purchase return day book
  7. Purchase day book
  8. Journal book

MCQs For Books Of Prime Entry

What is the book of prime entry?

  1. A ledger book
  2. Financial statement
  3. Consolidation statement
  4. Source of event

Is trial balance a book of prime entry?

  1. Main book in prime entry
  2. Part of the book of prime entry (Ledger)
  3. Not part of books of prime entry

Which of the following is not a book of prime?

  1. Account receivable
  2. Sales return day book
  3. Purchase return day book
  4. Purchase day book

What is another name for the books of prime entry that is usually used the accounting terms?

  1. Books of the financial ledger
  2. Subsidiary ledgers
  3. Financial ledger
  4. Sources of ledger

Are books of original entry and books of prime entry are same?

  1. Yes they both are the same
  2. No they both have different functions