Books of Account and Source Documents







Books of Account












• Books of secondary entries                      • Books of original entries

















• Main Ledger

- Debtor control a/c
- Creditor Control a/c
- Rent expenses a/c
- Depreciation a/c
- Building a/c

a/c=Account

 • Subsidiary Ledger

- Debtors a/c
- Creditors a/c
- Stock or inventory a/c

and other informal ledger accounts to keep the record and to monitor the business activities


• Credit transactions

- Purchase journal
- Sales journal
- Sales return journal
- Purchases return journal

• Cash Transactions

- Cash book
- Cash receipts journal
- Cash payments journal







Books of account refer to the records or books in which all financial information (transactions) of a business or an entity is recorded and maintained. For example, a journal is a book of account because it is used to record financial information of a business. Similarly, sales ledger account, purchase ledger account, cash book, general journal, purchase journal etc are examples of books of accounts

The process of recording financial information or transactions in the books of account is known as bookkeeping. Whereas, the person that records the financial information of a business in the books of account is called bookkeeper

Books of account are the records of transactions or financial information of a business which is why books of account are important for a business’s decision making, strategies formulating, evaluating the financial performance and making sure that business is complying with the rules of regulatory bodies

Books of account are mainly consist of Books of original entries and Books of secondary entries
Books of secondary entries are all those books of account that don’t record transactions in the first place. As opposed to this, they record the transactions which have already been recorded by the books of original entries (like cash book, journal etc)

In other words, books of secondary entries use the already recorded data or they don’t record original financial information rather than they use the previously recorded transactions from books of original entries. For example accountants record transactions in journals and then they transfer these transactions to ledger accounts which are the books of secondary entries

Examples of books of secondary entries

Main ledger accounts such as debtor control account, creditor control account, building account, depreciation account, rent account, sales account, purchases account etc.

Subsidiary ledger accounts such as debtors accounts, creditors accounts, stock account and other ledger accounts to keep memorandum
Books of original entries are books in which we first record the transactions. We record entries in them according to nature of transactions and entries are made to them on daily basis

Books of original entries are used because business wants to record the detail of transactions or economic events as much as possible

Examples of books of original entries are as follows:

1. General journal or Day book - For recording general double entries

2. Sales Journal or Sales day book - For recording credit sales

3. Purchase journal or purchase day book - For recording purchases on credit

4. Sales return journal or sale return day book - For recording sales return

5. Purchase return journal or purchase return day book - For recording purchases return

6. Cash receipts journal - For recording all kinds of cash receipts

7. Cash payments journal - For recording all kinds of cash payments

8. Cash book - For recording cash receipts and payments
The formal and central ledger accounts of an organization. The balances of these ledger accounts are used to draw up the trial balance which is mostly used to prepare financial statements such as income statement and balance sheet

Examples of main ledger accounts

Debtor control account, creditor control account, building account, depreciation account, rent account, sales account, purchases account etc.
The informal ledger accounts of an organization. The balances of these ledger accounts are mostly NOT used to draw up the trial balance. Subsidiary ledger account are merely meant for keeping the memorandum or record of a business's transactions. For example if a business needs the record each and every account receivable and account payable, then it would most likely maintain a set of subsidiary ledger accounts

Examples of subsidiary ledger accounts

All ledger accounts of Debtors and creditors, stock account and other ledger accounts to keep memorandum
Non-Cash based transactions, for example you purchase a car on credit. You don't pay the price at the time of purchase but you promise to pay after a month
Cash based transactions, for example you purchase a car and pay the price at time of purchase

Books of account

Books of account refer to the records or books in which all financial information (transactions) of a business or an entity is recorded and maintained. For example, a journal is a book of account because it is used to record financial information of a business. Similarly, sales ledger account, purchase ledger account, cash book, general journal, purchase journal etc are examples of books of accounts

The process of recording financial information or transactions in the books of account is known as bookkeeping. Whereas, the person that records the financial information of a business in the books of account is called bookkeeper

Books of account are the records of transactions or financial information of a business which is why books of account are important for a business’s decision making, strategies formulating, evaluating the financial performance and making sure that business is complying with the rules of regulatory bodies

Examples of books of account:

Books of account are mainly consist of Books of original entries and Books of secondary entries

Books of original entries contain:

1. General journal or Day book - For recording general double entries..... keep on reading
2. Sales Journal or Sales day book - For recording credit sales..... keep on reading
3. Purchase journal or purchase day book - For recording purchases on credit..... keep on reading
4. Sales return journal or sale return day book - For recording sales return..... keep on reading
5. Purchase return journal or purchase return day book - For recording purchases return..... keep on reading
6. Cash receipts journal - For recording all kind of cash receipts..... keep on reading
7. Cash payments journal - For recording all kind of cash payments..... keep on reading
8. Cash book - For recording cash receipts and payments..... keep on reading

Books of secondary entries include:

Main ledger accounts such as debtor control account, creditor control account, building account, depreciation account, rent account, sales account, purchases account etc.

Subsidiary ledger accounts such as debtors accounts, creditors accounts, stock account and other ledger accounts to keep memorandum

These all journals and ledger accounts are collectively referred to as books of account

Explanation of Books of Account

Books of original entries

Books of original entries are books in which we first record the transactions. We record entries in them according to nature of transactions and entries are made to them on daily basis

Books of original entries are used because business wants to record the detail of transactions or economic events as much as possible

Examples of books of original entries are as follows:


1. General journal or Day book - For recording general double entries..... keep on reading
2. Sales Journal or Sales day book - For recording credit sales..... keep on reading
3. Purchase journal or purchase day book - For recording purchases on credit..... keep on reading
4. Sales return journal or sale return day book - For recording sales return..... keep on reading
5. Purchase return journal or purchase return day book - For recording purchases return..... keep on reading
6. Cash receipts journal - For recording all kind of cash receipts..... keep on reading
7. Cash payments journal - For recording all kind of cash payments..... keep on reading
8. Cash book - For recording cash receipts and payments..... keep on reading


Benefits of books of original entries

The requirement for Books of original entries is significant because businesses need more information of a transaction than an account can provide. For example if a business sells goods on credits to Mr. Z, business would like to record all his contact details and personal details.

Moreover, In the course of business, source document (such as invoices, credit notes and debit notes etc..) are created. The detail of these source documents need to be summarized, as otherwise the business may forget to make payment or ask for the payment of cash or even accidentally pay twice. In other words, businesses need the record of source documents of transactions to track what's going on. These kinds of records are made in books of original entries.


Books of secondary entries

Books of secondary entries are all those books of account that don’t record transactions in the first place. As opposed to this, they record the transactions which have already been recorded by the books of original entries (like cash book, journal etc)

In other words, books of secondary entries use the already recorded data or they don’t record original financial information rather than they use the previously recorded transactions from books of original entries. For example accountants record transactions in journals and then they transfer these transactions to ledger accounts which are the books of secondary entries

Examples of books of secondary entries

Main ledger accounts such as debtor control account, creditor control account, building account, depreciation account, rent account, sales account, purchases account etc.

Subsidiary ledger accounts such as debtors accounts, creditors accounts, stock account and other ledger accounts to keep memorandum


Benefits of Books of secondary entries

The main benefit of ledger account is: it helps summarize and group together different transactions related to the same item or person which is helpful in preparing financial statements because while preparing financial statement we need the total increase or decrease in an item or a person account during an accounting period. For example if you think of sales, while preparing income statement we would be interested in total amount of sales made during this accounting and this figure can be extracted from sales account

The other benefits are listed below:

By classifying different transactions into related accounts, it helps in the preparation of trial balance to check the arithmetic accuracy of our accounting record

Separate ledger helps avoid different types of errors and it’s easier to check the accuracy of accounting record when similar transactions have been compiled together into a single related account

Separate ledger account of an item that groups many transactions can be helpful in tracing the specific pattern of increase or decrease in that item and figuring out the reasons for the same which would be a messy task without ledger accounts