Books of Prime Entry

Book of Prime Entry Meaning

A book or record where certain types of transactions are recorded before recording it in the double-entry book-keeping system, and hence the prime entry. The common books of prime entry include the daybook, the cash book, and the journal. Here the information of the business transactions is recorded. 


In our discussion today, we will uphold the topic of Books of Prime Entry in the case of Accounting and its importance in the sector. This is the basis of studying accountancy which the students must be enthusiastic about.


Books of Prime Entry in Accounting

In business, there are numerous daily financial transactions. So, there is a separate book to keep the track of the receipts and payments of this transaction.


The ledger accounts in a business are the main source of information that is used to prepare financial statements. While, if a business is required to update their ledgers then each time a transaction occurs, the ledger accounts would quickly become clustered and chances of errors might be made. This would also be a very lengthy process.


To avoid all such complications, the transactions are first recorded in a book of prime entry. The main books of prime entry are:

  • Sales daybook

  • Purchase daybook

  • Sales return daybook

  • Purchases return daybook

  • Bank Book

  • Cash Receipts Book

  • Cash Payments Book

  • Petty Cash Receipts Book

  • Petty Cash Payments Book

  • Journal


Importance of Books of Prime Entry

Now we are quite sure that the Books of Prime Entry are very much prevalent in the business, for their advantageous characteristics. The following are the advantages of a journal:

  • Provides a Chronological Record: Journal book records transactions in the occurrence of their date. Hence, it is possible to get day-to-day information.

  • The Book of Prime Entry Minimizes the possibility of errors: The nature of the transaction affects the financial position of the business; this is ascertained by recording and analyzing the transaction.

  • Helps to finalize the accounts: With the book of prime entry, it provides a basis for ledger posting and the ultimate draft of the Trial Balance.  

  • Future references: References can be given to the financial transactions that become easy as these transactions are similar and are recorded in one journal.

  • Few mistakes and can be detected easily: With the help of Prime Entry, the mistakes in the ledger accounts can be easily detected.

  • Lessens the chance of business fraud, negligence, and mistakes: The Chronological recording of the financial transactions reduces the chance of business frauds, negligence, and mistakes.

  • Journals are shown in clarity: Journals show all these transactions in great detail so the business is not mandated to rewrite them in detail in the ledger section, thus it keeps the ledger accounts brief and uncluttered.

  • Perfect back-up of each other: If records are by chance lost then along with the ledger and the books of original entry the organization will get through. They act as a perfect backup for each other.

  • Bases the control on one ground: Handling of each type of journal entry by a different member of the staff causes variation, this prevents a single person from having exclusive control on the accounting system. This leads to fraud and is difficult to make. Hence, it is more likely that errors would be identified by this system.

  • Ensuring that the documents are not skipped: To ensure that the documents do not go unrecorded, the source of documents are normally copied twice with consecutive numbers and are noted in day books while recording the transactions.


The Significance of Prime Entry Books and Ledgers in both Integrated and Interlocking Accounting Systems

The term 'ledger' refers to a book. There are commonly three ledgers in accounting systems:

  • Wages, sales, purchases, electricity, travel, advertising, rent, insurance, repairs, receivables, payables, and non-current assets are all recorded in the General or nominal ledger. Although cash and bank accounts are legally part of this ledger, they are frequently kept in a separate book due to the volume of cash and bank transactions.

  • The Payables ledger (sometimes known as the creditors' ledger or the purchase ledger) is a record of all payments made to creditors. Although the overall amount owing to suppliers is noted in the general ledger, the specifics of what is owed to whom are documented here as well. Each supplier has his or her account. The payables balance in the general ledger should match the total of the amounts owed in this ledger.

  • The Receivables ledger (also known as the debtors' ledger or the sales ledger) is a book that keeps track of money owed to you. The overall amount owed by customers is recorded in the general ledger, but the specifics of what is owed from whom are also noted here. Each credit consumer has his or her account. The total of the sums owing in this ledger should match the main ledger's receivables balance.


These were the meaning and importance of The Book of Prime Entry.

FAQs on Books of Prime Entry

1. What is the definition of Trial Balance?

A trial balance is a bookkeeping worksheet in which the balances of all the ledgers are collated and drafted into equal and counted debit and credit account column totals. The purpose of preparing a trial balance for a business is to discover any mathematical problems in the double-entry accounting system. The trial balance is considered balanced if the total debits match the total credits, and there should be no mathematical mistakes in the ledgers. However, this does not rule out the possibility of accounting system problems. For example, poorly categorized transactions or those that are simply absent from the system might nevertheless represent major accounting errors that the trial balance technique would overlook.

2. What's the Point of Keeping a Purchase Day Book?

The purchases day book is used to keep track of all purchase invoices for the company's goods and services that are provided on credit. In today's corporate world, a significant share of purchases is done on credit (the items are delivered immediately, but the payment is made later). Purchases book, also known as a purchases day book, is a book of original entries used to record credit purchases. You should be aware that cash purchases will not be recorded in the purchases day book since cash transactions must be recorded in the cash book. The purchasing book is tallied at the end of each month.

3. What is the purpose of a Sales Day Book?

The sales diary, often known as the sales day book, is a unique journal designed to keep track of credit sales. The sales journal is just a chronological list of all sales invoices; it was established to save time, avoid cluttering the general ledger with too much minute detail, and allow for the separation of jobs. The sales day book is a manually kept ledger in which the critical details for each credit sale to a customer are documented, including Based on the company's copies of all client invoices issued, this information is normally added to the sales day book after each business day.

4. What is a Cash Book, exactly?

A cash book is a subsidiary ledger to the general ledger in which all cash transactions are recorded for a specific accounting period. This is listed in reverse chronological order. The cash book is typically divided into two sections in large organizations: the cash distribution journal, which records all cash payments, and the cash receipts journal, which records all cash received into the business. Cash Book is a term that is used to describe a


A cash book is a sort of book that is solely focused on the recording of a company's cash transactions. It serves as both a journal and a ledger for all monetary transactions that occur in a firm.


A cash book records all of the organization's cash receipts on the debit side and all of the organization's cash payments on the credit side.

5. What are Books of Prime Entry in Accounting?

Numerous financial transactions occur regularly in the corporate world. As a result, there is a separate book to keep track of the transaction's receipts and payments.


In a business, ledger accounts are the primary source of information for preparing financial statements. If a company is compelled to update its ledgers every time a transaction occurs, the ledger accounts will quickly get clustered, increasing the risk of errors. This would also be a highly time-consuming procedure.


To avoid any problems, the transactions are initially documented in a prime entry book.

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