Books of prime entry (also known as books of original entry) are the first accounting records used to capture business transactions in a systematic, chronological, and organised manner. Instead of posting every transaction directly into the ledger, businesses first record transactions in these books to ensure accuracy, clarity, and a complete audit trail.
They act as the starting point of the accounting process, providing the raw financial information needed to create ledgers, trial balances, and ultimately financial statements.
Why Books of Prime Entry Matter
Books of prime entry help organisations to:
- Record transactions quickly and efficiently
- Organise financial data into categories (sales, purchases, cash, etc.)
- Reduce errors by separating the initial recording from the ledger posting
- Provide a clear audit trail for accountants and auditors
- Support the preparation of financial statements
They are essential for maintaining accurate, reliable, and complete accounting records.
Main Types of Books of Prime Entry
1. Sales Daybook
Records all credit sales made by the business.
Typically includes:
- Date of sale
- Customer name
- Invoice number
- Amount of the sale
It helps track revenue earned from goods or services sold on credit.
Note: Cash sales do not go into the sales daybook—they are recorded in the cash book.
2. Purchase Daybook
Records all credit purchases made by the business.
Includes:
- Date of purchase
- Supplier name
- Invoice details
- Amount of the purchase
This book helps the business monitor amounts owed to suppliers.
3. General Journal
Also known as the journal proper, it records transactions that do not belong in any other specific book. Examples include:
- Wages and salaries
- Accruals and prepayments
- Error corrections
- Opening and closing entries
- Non-routine transactions
It serves as a catch-all for unusual, adjusting, or complex entries.
4. Cash Book (or Bank Book)
Records all transactions involving cash and bank accounts, such as:
- Cash receipts
- Cash payments
- Bank deposits
- Withdrawals
- Electronic transfers
The cash book acts both as a book of prime entry and a ledger account for cash and bank balances.
5. Petty Cash Book
Records small, everyday cash payments, often handled through an imprest system.
Examples include:
- Postage
- Office supplies
- Minor travel expenses
This helps track small expenditures separately from larger cash transactions.
How Books of Prime Entry Feed Into the Accounting System
Once transactions are recorded in the appropriate book of prime entry, they are posted to the ledger accounts. This ensures:
- Accuracy in categorising transactions
- A reduced risk of duplication or omission
- A strong audit trail for checking errors and validating activity
The ledger balances are later used to prepare the trial balance and ultimately the financial statements, such as the income statement and statement of financial position.
Practical Importance for Accountants and Students
Understanding books of prime entry is essential for:
- Preparing accurate financial statements
- Completing bookkeeping tasks
- Understanding the flow of accounting information
Passing exams such as ACCA FA, MA, and other foundational subjects
They are the foundation upon which all double-entry accounting is built.
