Books of prime entry

Topic 4: Books of Prime Entry — 50 Hard MCQs

1. A business sells goods on credit for $4600 plus sales tax of 15%.

In which book of prime entry is this transaction first recorded?

A cash book
B general journal
C sales journal
D sales returns journal

2. A business buys office equipment on credit for $8200.

In which book of prime entry is this transaction first recorded?

A cash book
B general journal
C purchases journal
D purchases returns journal

3. A business buys goods for resale on credit for $14 000.

In which book of prime entry is this transaction first recorded?

A general journal
B purchases journal
C sales journal
D cash book

4. A credit customer returns goods originally sold for $760.

Which book of prime entry records the transaction?

A purchases returns journal
B sales journal
C sales returns journal
D cash book

5. A business returns goods costing $1250 to a credit supplier.

Which book of prime entry records this transaction?

A purchases journal
B purchases returns journal
C sales returns journal
D general journal

6. Which transaction is recorded in the general journal?

A cash sales
B credit purchase of inventory
C credit purchase of machinery
D payment to supplier

7. Which source document supports an entry in the sales journal?

A credit note received
B invoice issued
C receipt issued
D statement received

8. Which source document supports an entry in the purchases journal?

A invoice received
B invoice issued
C credit note issued
D receipt issued

9. Which source document supports an entry in the sales returns journal?

A credit note issued
B debit note issued
C invoice received
D receipt received

10. Which source document supports an entry in the purchases returns journal?

A credit note received from supplier
B invoice issued to customer
C receipt issued to customer
D bank statement

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. A business has the following credit sales invoices.

Customer	Goods value	Sales tax
Ali	$2000	$300
Bala	$3500	$525
Chan	$1800	$270

What total is posted from the sales journal to the sales account?

A $7300
B $8395
C $1095
D $6205

12. Using the information in Question 11, what total is posted to the trade receivables control account?

A $1095
B $6205
C $7300
D $8395

13. A purchases journal contains invoices for goods costing $9600 plus sales tax of $1440.

What amount is posted to the purchases account?

A $1440
B $8160
C $9600
D $11 040

14. Using the information in Question 13, what amount is posted to the trade payables control account?

A $1440
B $8160
C $9600
D $11 040

15. A sales returns journal contains goods returned by customers of $1200 plus sales tax of $180.

What amount is posted to the sales returns account?

A $180
B $1020
C $1200
D $1380

16. Using the information in Question 15, what amount is posted to the trade receivables control account?

A $180
B $1020
C $1200
D $1380

17. A purchases returns journal contains returns of goods costing $2500 plus sales tax of $375.

What amount is posted to the purchases returns account?

A $375
B $2125
C $2500
D $2875

18. Using the information in Question 17, what amount is posted to the trade payables control account?

A $375
B $2125
C $2500
D $2875

19. Which transaction is recorded in the cash book?

A goods bought on credit
B goods sold on credit
C cheque received from customer
D machinery bought on credit

20. Which statement about the cash book is correct?

A It is only a book of prime entry and not part of double entry.
B It records only credit transactions.
C It acts as both a book of prime entry and a ledger account.
D It records only petty cash payments.

21. A three-column cash book contains columns for:

A cash, bank and discount
B sales, purchases and inventory
C assets, liabilities and capital
D revenue, expenses and profit

22. A business receives a cheque from a credit customer for $1900 after allowing cash discount of $100.

Which entry is made in the cash book?

A debit bank $1900, credit discount allowed $100
B debit bank $1900 and debit discount allowed $100
C credit bank $1900 and debit discount received $100
D debit cash $2000 and credit discount allowed $100

23. A business pays a supplier $2700 by cheque after deducting discount received of $300.

Which entry is made in the cash book?

A credit bank $2700 and credit discount received $300
B debit bank $2700 and debit discount received $300
C credit cash $3000 and credit discount received $300
D debit trade payables $3000 and credit bank $2700

24. Which side of the cash book records cash received?

A debit side
B credit side
C both sides
D neither side

25. Which side of the cash book records payments made?

A debit side
B credit side
C both sides
D neither side

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

26. The cash book shows a debit balance of $4500.

What does this mean?

A bank overdraft
B cash/bank asset
C expense owing
D trade payable

27. The bank column in the cash book shows a credit balance.

What does this usually mean?

A bank overdraft
B bank deposit asset
C cash sales
D capital introduced

28. Which transaction would appear on the debit side of the cash book?

A payment of wages
B cheque received from trade receivable
C cheque paid to supplier
D cash drawings by owner

29. Which transaction would appear on the credit side of the cash book?

A cash introduced by owner
B cash sale
C receipt from customer
D payment of rent

30. A business transfers $3000 from cash into the bank account.

How is this recorded in the cash book?

A debit cash $3000, credit bank $3000
B debit bank $3000, credit cash $3000
C debit transfers $3000, credit bank $3000
D debit capital $3000, credit cash $3000

31. A business withdraws $1200 from bank for office cash.

How is this recorded in the cash book?

A debit cash $1200, credit bank $1200
B debit bank $1200, credit cash $1200
C debit drawings $1200, credit bank $1200
D debit petty cash $1200, credit sales $1200

32. What is a contra entry in the cash book?

A transfer between cash and bank columns
B correction of an error in the sales journal
C entry for irrecoverable debts
D entry for goods returned to supplier

33. Which letter is often used to mark a contra entry in the cash book?

A C
B D
C J
D P

34. A petty cash book is usually maintained using the imprest system. What does this mean?

A petty cashier keeps unlimited cash
B petty cash is restored to a fixed amount after reimbursement
C all cash payments are made by petty cash
D petty cash replaces the main cash book

35. A petty cash float is $500. During the month, payments total $365.

How much cash is reimbursed at the end of the month?

A $135
B $365
C $500
D $865

36. Using the information in Question 35, how much cash is in the petty cash box just before reimbursement?

A $135
B $365
C $500
D $865

37. Which payment is most suitable for petty cash?

A purchase of delivery van
B payment of monthly wages
C postage stamps
D repayment of bank loan

38. Which document supports a petty cash payment?

A invoice issued
B petty cash voucher
C purchase order
D bank reconciliation statement

39. Which book records small cash payments before they are posted to expense accounts?

A petty cash book
B purchases journal
C sales journal
D sales returns journal

40. A petty cash book has analysis columns for postage, stationery and travel. Postage payments total $74.

Where is this total posted?

A debit postage account
B credit postage account
C debit petty cash account
D credit bank account

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. Which transaction is usually recorded in the general journal?

A correcting an error
B cash sale
C credit sale of goods
D credit purchase of goods for resale

42. Which transaction is usually recorded in the general journal?

A owner introduces inventory into the business
B customer pays by cheque
C supplier allows cash discount
D goods sold on credit

43. Which transaction is usually recorded in the general journal?

A opening entries at the start of a new accounting period
B cash paid for rent
C credit purchase of goods for resale
D cash sales

44. Which transaction is usually recorded in the general journal?

A depreciation charge for the year
B credit purchase of inventory
C credit sale of goods
D cash received from customer

45. Which transaction is usually recorded in the general journal?

A transfer of profit to capital
B payment to supplier
C goods returned by customer
D credit purchase of inventory

46. A business corrects an error where rent of $600 was wrongly debited to repairs.

Which book of prime entry is used to record the correction?

A cash book
B general journal
C purchases journal
D sales journal

47. A business starts with assets of $40 000, liabilities of $15 000 and capital of $25 000.

Which book is used to record the opening entries?

A cash book
B general journal
C purchases returns journal
D sales journal

48. Which statement about books of prime entry is correct?

A They record transactions before posting to ledger accounts.
B They replace the need for ledger accounts.
C They are only used for cash transactions.
D They show only year-end adjustments.

49. Which pair is correctly matched?

A sales journal — credit purchases of goods
B purchases journal — credit purchases of goods for resale
C general journal — cash received from customer
D sales returns journal — goods returned to supplier

50. Which pair is correctly matched?

A cash book — cheque payments and receipts
B purchases returns journal — credit sales returns
C sales journal — cash sales
D petty cash book — purchase of non-current assets on credit

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

1. C — sales journal

• Credit sale of goods is first recorded in the sales journal.

• Sales tax does not change the book used.

• Cash book is only for cash/bank transactions.

• General journal is not used for normal credit sales of goods.

2. B — general journal

• Office equipment is a non-current asset.

• Purchases journal is only for credit purchases of goods for resale.

• Credit purchase of a non-current asset is recorded in the general journal.

3. B — purchases journal

• Goods for resale bought on credit are recorded in the purchases journal.

• If it was cash purchase, it would go in the cash book.

4. C — sales returns journal

• Goods returned by a credit customer are recorded in the sales returns journal.

• This reduces trade receivables and sales returns are later posted.

5. B — purchases returns journal

• Goods returned to a credit supplier are recorded in the purchases returns journal.

• This reduces trade payables.

6. C — credit purchase of machinery

• Machinery is a non-current asset.

• Credit purchase of non-current assets is recorded in the general journal.

• Credit purchase of inventory goes in the purchases journal.

7. B — invoice issued

• Sales journal is supported by sales invoices issued to customers.

• Invoice issued = evidence of credit sale.

8. A — invoice received

• Purchases journal is supported by purchase invoices received from suppliers.

• Invoice received = evidence of credit purchase.

9. A — credit note issued

• When a customer returns goods, the seller issues a credit note.

• This supports the sales returns journal.

10. A — credit note received from supplier

• When goods are returned to a supplier, the supplier sends a credit note.

• This supports the purchases returns journal.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

11. A — $7300

• Sales account records the net goods value, excluding sales tax.

• Goods value = 2000 + 3500 + 1800

• = $7300

• Sales tax is posted separately to the sales tax account.

12. D — $8395

• Trade receivables control account records the total amount owed by customers.

• Total goods value = $7300

• Total sales tax = 300 + 525 + 270 = $1095

• Total receivables = 7300 + 1095

• = $8395

13. C — $9600

• Purchases account records the net value of goods bought.

• Sales tax is not included in purchases if recoverable.

• Amount posted to purchases = $9600

14. D — $11 040

• Trade payables control account records total amount owed to suppliers.

• Purchases = $9600

• Sales tax = $1440

• Total payable = 9600 + 1440

• = $11 040

15. C — $1200

• Sales returns account records the value of goods returned excluding sales tax.

• Sales tax is posted separately.

• Amount posted to sales returns = $1200

16. D — $1380

• Trade receivables control account is reduced by the total amount including sales tax.

• Sales returns = $1200

• Sales tax = $180

• Total reduction in receivables = $1380

17. C — $2500

• Purchases returns account records goods value excluding sales tax.

• Sales tax is posted separately.

• Purchases returns = $2500

18. D — $2875

• Trade payables control account is reduced by the full amount including sales tax.

• Purchases returns = $2500

• Sales tax = $375

• Total reduction in payables = $2875

19. C — cheque received from customer

• Cash book records cash and bank transactions.

• Cheque received from customer affects bank.

• Credit purchases/sales are recorded in journals, not cash book.

20. C — It acts as both a book of prime entry and a ledger account

• Cash book records cash/bank transactions first.

• It also acts as the cash and bank ledger accounts.

• So it has a double role.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

21. A — cash, bank and discount

• A three-column cash book has:

  • cash column

  • bank column

  • discount column

• Discount allowed appears on debit side.

• Discount received appears on credit side.

22. B — debit bank $1900 and debit discount allowed $100

• Customer owed $2000.

• Customer paid $1900.

• Discount allowed = $100.

• In cash book:

  • bank column debit = $1900

  • discount allowed column debit = $100

23. A — credit bank $2700 and credit discount received $300

• Supplier was owed $3000.

• Business paid $2700.

• Discount received = $300.

• In cash book:

  • bank column credit = $2700

  • discount received column credit = $300

24. A — debit side

• Receipts increase cash/bank.

• In the cash book, receipts are recorded on the debit side.

25. B — credit side

• Payments reduce cash/bank.

• In the cash book, payments are recorded on the credit side.

26. B — cash/bank asset

• A debit balance in cash/bank means the business has money available.

• It is an asset.

27. A — bank overdraft

• A credit balance in the bank column means the business has withdrawn more than it has.

• This is a bank overdraft.

• It is a current liability.

28. B — cheque received from trade receivable

• Receipts are recorded on the debit side of the cash book.

• A customer’s cheque increases bank.

29. D — payment of rent

• Payments are recorded on the credit side of the cash book.

• Rent paid reduces bank/cash.

30. B — debit bank $3000, credit cash $3000

• Cash is moved into the bank.

• Bank increases = debit bank.

• Cash decreases = credit cash.

• This is a contra entry.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

31. A — debit cash $1200, credit bank $1200

• Money is withdrawn from bank and placed into office cash.

• Cash increases.

• Bank decreases.

• This is also a contra entry.

32. A — transfer between cash and bank columns

• Contra entry means cash is transferred to bank or bank to cash.

• It affects both sides of the cash book.

33. A — C

• Contra entries are usually marked with the letter C.

• This shows the double entry is completed within the cash book itself.

34. B — petty cash is restored to a fixed amount after reimbursement

• Under imprest system, petty cash starts with a fixed float.

• At the end of the period, the cashier is reimbursed with exactly the amount spent.

• This restores the float.

35. B — $365

• Float = $500

• Payments = $365

• Reimbursement equals amount spent.

• Reimbursed = $365

36. A — $135

• Float = $500

• Payments = $365

• Cash left = 500 – 365

• = $135

37. C — postage stamps

• Petty cash is used for small cash payments.

• Postage stamps are small expenses.

• Delivery vans, wages and loan repayments are too large/important for petty cash.

38. B — petty cash voucher

• A petty cash voucher supports a petty cash payment.

• It proves why the cash was spent.

39. A — petty cash book

• The petty cash book records small cash payments.

• These are later analysed and posted to expense accounts.

40. A — debit postage account

• Postage is an expense.

• Expense increases = debit postage account.

• Petty cash book analysis columns are posted to relevant expense accounts.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.

41. A — correcting an error

• Error correction is usually recorded in the general journal.

• Cash sales go in the cash book.

• Credit sales go in the sales journal.

• Credit purchases of goods go in the purchases journal.

42. A — owner introduces inventory into the business

• This is not a normal purchase from a supplier.

• It is capital introduced in the form of inventory.

• General journal records unusual/non-routine entries.

43. A — opening entries at the start of a new accounting period

• Opening balances are recorded through the general journal.

• Then they are posted into ledger accounts.

44. A — depreciation charge for the year

• Depreciation is a year-end adjustment.

• Year-end adjustments are usually recorded in the general journal.

45. A — transfer of profit to capital

• Transfer of profit to capital is an internal ledger adjustment.

• It is recorded in the general journal.

46. B — general journal

• Correction of errors is recorded in the general journal.

• Rent wrongly debited to repairs needs a correcting journal entry.

47. B — general journal

• Opening entries are recorded in the general journal.

• The general journal is used when no specialist book applies.

48. A — They record transactions before posting to ledger accounts

• Books of prime entry are the first place transactions are recorded.

• They do not replace ledger accounts.

• They help organise transactions before posting.

49. B — purchases journal — credit purchases of goods for resale

• Purchases journal records credit purchases of inventory/goods for resale.

• Sales journal records credit sales.

• Sales returns journal records goods returned by customers.

• General journal records unusual adjustments, not normal cash receipts.

50. A — cash book — cheque payments and receipts

• Cash book records cash and bank receipts/payments.

• Purchases returns journal records goods returned to suppliers.

• Sales journal records credit sales, not cash sales.

• Petty cash book does not record credit purchase of non-current assets.

Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.