Books of Prime Entry (Copy)
Topic 2.3: Books of Prime Entry – Quiz
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. What are books of prime entry used for?
A. Preparing financial statements
B. Recording ledger balances
C. Making adjusting entries
D. Recording initial business transactions
2. Which of the following is NOT a book of prime entry?
A. Sales journal
B. Petty cash book
C. Capital account
D. Purchases journal
3. Which book of prime entry records goods returned by customers?
A. Purchases journal
B. Sales returns journal
C. Sales journal
D. Petty cash book
4. Which book of prime entry is used to record credit purchases of goods for resale?
A. Sales journal
B. Purchases journal
C. General journal
D. Petty cash book
5. What is the purpose of the general journal?
A. To record all cash transactions
B. To record transactions not in other prime books
C. To record purchases of goods for resale
D. To record bank interest
6. Which of the following is recorded in the cash book?
A. Credit sales
B. Purchase of office supplies on credit
C. Cash paid to supplier
D. Goods returned to supplier
7. The dual role of the cash book is:
A. A book of original entry and used only for bank entries
B. A financial statement and ledger
C. A book of prime entry and a ledger for cash and bank
D. A purchase journal and sales journal
8. Which of the following is used to record bank charges?
A. Sales journal
B. General journal
C. Petty cash book
D. Purchases returns journal
9. In the imprest system of petty cash, how is the float restored?
A. With any random amount
B. By reimbursing all spent money to restore the original amount
C. By borrowing from cash book
D. By transferring petty cash to general journal
10. What is the purpose of the petty cash book?
A. To record all cash sales
B. To record small, frequent payments
C. To record credit purchases
D. To record capital investment
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. What is the book of prime entry for recording credit sales?
A. Sales journal
B. Purchases journal
C. Petty cash book
D. General journal
12. What is the correct entry from the sales journal to the ledger?
A. Debit Purchases, Credit Customer
B. Debit Sales, Credit Capital
C. Debit Customer, Credit Sales
D. Debit Sales, Credit Bank
13. Which document is used to record credit purchases returned to suppliers?
A. Invoice
B. Debit note
C. Credit note
D. Purchases returns journal
14. Which book is used to record dishonoured cheques?
A. Sales journal
B. Petty cash book
C. General journal
D. Purchases journal
15. Trade discount is:
A. Deducted for early payment
B. Deducted when payment is late
C. Deducted at the time of sale
D. A refund of overpayment
16. Cash discount is given when:
A. Goods are returned
B. Cash is paid after due date
C. Payment is made promptly
D. Supplier wants to end the account
17. What is the difference between trade and cash discount?
A. Trade discount is shown in ledger, cash discount is not
B. Cash discount affects the ledger, trade discount does not
C. Both affect the ledger
D. Neither affects the ledger
18. In which book is a payment made via electronic bank transfer recorded?
A. Petty cash book
B. Sales journal
C. Cash book
D. General journal
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
19. The purchases returns journal is used to record:
A. Returned goods sold on credit
B. Goods purchased for resale returned to suppliers
C. Goods purchased with cash
D. Credit notes received from customers
20. Which book of prime entry includes bank transfers?
A. Sales returns journal
B. Petty cash book
C. Cash book
D. Purchases journal
21. What is the effect of recording a trade discount in an invoice?
A. Increase the amount payable
B. Decrease the amount payable
C. Increase capital
D. Affect bank balance
22. What is the source document for the sales journal?
A. Credit note
B. Invoice
C. Debit note
D. Cheque
23. What is entered in the petty cash book under the imprest system?
A. Only income
B. Small payments and reimbursements
C. All sales
D. Only purchases
24. A bookkeeper paid $8 for postage using petty cash. Which entry is correct?
A. Debit Postage, Credit Petty Cash
B. Debit Petty Cash, Credit Postage
C. Debit Postage, Credit Bank
D. Debit Cash, Credit Petty Cash
25. Which of the following is not a benefit of using books of prime entry?
A. Saves time and improves accuracy
B. Reduces repetitive posting
C. Increases audit complexity
D. Groups similar transactions together
26. What type of transactions are recorded in the general journal?
A. Only cash sales
B. Opening entries, errors, dishonoured cheques
C. Credit purchases
D. Petty cash expenses
27. Cash discount received from supplier is posted in:
A. Sales account
B. Purchases account
C. Discount received account
D. Bank account
28. The imprest amount is:
A. A loan from the owner
B. The original petty cash amount restored each period
C. The total income earned
D. A type of discount
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
29. Trade discount is shown:
A. In the income statement
B. In the ledger
C. On the invoice only
D. In the purchases account
30. Petty cash is useful because:
A. It helps reduce theft
B. It records high-value payments
C. It simplifies recording small, frequent expenses
D. It is used to track investment capital
Answer key and explanations
Topic 2.3 – Books of Prime Entry
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. Correct Answer: D
Explanation: Books of prime entry are used to first record business transactions before posting to the ledger.
2. Correct Answer: C
Explanation: The capital account is part of the ledger, not a book of prime entry.
3. Correct Answer: B
Explanation: The sales returns journal is used to record goods returned by credit customers.
4. Correct Answer: B
Explanation: Credit purchases of goods for resale are recorded in the purchases journal.
5. Correct Answer: B
Explanation: The general journal is used to record entries not suitable for other prime books, such as corrections and opening balances.
6. Correct Answer: C
Explanation: Cash paid to a supplier is a cash transaction and is recorded in the cash book.
7. Correct Answer: C
Explanation: The cash book is both a book of prime entry and also serves as the ledger account for cash and bank.
8. Correct Answer: B
Explanation: Bank charges are not cash transactions from the business side and are entered via the general journal.
9. Correct Answer: B
Explanation: Under the imprest system, the amount spent is reimbursed to restore the petty cash float to its original level.
10. Correct Answer: B
Explanation: The petty cash book records small payments like postage, stationery, and transport fares.
11. Correct Answer: A
Explanation: The sales journal is used to record all credit sales of goods.
12. Correct Answer: C
Explanation: When posting from the sales journal, debit the customer and credit the sales account.
13. Correct Answer: D
Explanation: Purchases returns journal is used to record credit purchases returned to suppliers.
14. Correct Answer: C
Explanation: Dishonoured cheques are non-standard transactions recorded in the general journal.
15. Correct Answer: C
Explanation: Trade discount is given at the time of sale and is shown on the invoice.
16. Correct Answer: C
Explanation: Cash discount is given for early or prompt payment, as an incentive.
17. Correct Answer: B
Explanation: Cash discount is posted in ledger accounts; trade discount is not.
18. Correct Answer: C
Explanation: Bank transfers are part of cash/bank transactions and are recorded in the cash book.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
19. Correct Answer: B
Explanation: Purchases returns journal records goods returned to suppliers.
20. Correct Answer: C
Explanation: Bank transfers go through the bank and are recorded in the cash book.
21. Correct Answer: B
Explanation: Trade discount decreases the invoice value and reduces the amount payable.
22. Correct Answer: B
Explanation: The invoice is the source document for the sales journal.
23. Correct Answer: B
Explanation: The petty cash book under the imprest system records small payments and the float is reimbursed as needed.
24. Correct Answer: A
Explanation: The expense account (e.g., postage) is debited and petty cash is credited when cash is used.
25. Correct Answer: C
Explanation: Using books of prime entry actually simplifies auditing, not complicates it.
26. Correct Answer: B
Explanation: The general journal records non-standard entries such as opening balances, errors, and dishonoured cheques.
27. Correct Answer: C
Explanation: A cash discount received from a supplier is recorded in the discount received account.
28. Correct Answer: B
Explanation: The imprest amount is the fixed amount kept in petty cash at the beginning of each period.
29. Correct Answer: C
Explanation: Trade discount is shown on the invoice only and is not recorded in the books.
30. Correct Answer: C
Explanation: Petty cash helps handle and record small frequent payments efficiently.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course