Source documents and books of prime entry: sales, purchases, returns, journal, cash book links

1. A trader bought goods for resale on credit. The list price was $2400, trade discount was 10%, and a cash discount of 5% was available if payment was made within 14 days. What amount is entered in the purchases journal?

A $2052
B $2160
C $2280
D $2400

2. A trader sold goods on credit. The list price was $1800, trade discount was 20%, and cash discount of 2% was offered for prompt payment. What amount is entered in the sales journal?

A $1440
B $1411.20
C $1764
D $1800

3. A customer returned goods with a list price of $600. The original sale was subject to trade discount of 10%. What amount is entered in the sales returns journal?

A $60
B $500
C $540
D $600

4. Goods with a list price of $800 were returned to a supplier. The original purchase was subject to trade discount of 25%. What amount is entered in the purchases returns journal?

A $200
B $575
C $800
D $600

5. A business bought a motor van on credit from Motor Traders Ltd. Which book of prime entry should be used?

A Purchases journal
B Cash book
C General journal
D Purchases returns journal

6. A business sold an old machine on credit. Which book of prime entry should be used?

A Sales journal
B Sales returns journal
C General journal
D Cash book

7. Which item is not normally recorded in a book of prime entry?

A Credit note received
B Invoice sent
C Cheque paid
D Statement of account received

8. Which source document is used to make entries in the sales journal?

A Copy sales invoice issued
B Supplier’s invoice received
C Credit note received
D Bank paying-in slip

9. A business returned damaged goods to a supplier. The supplier accepted the return and sent a document reducing the amount owed. Which document is the strongest evidence for the entry in the purchases returns journal?

A Statement of account received
B Credit note received
C Sales invoice issued
D Receipt issued

10. Goods for resale are bought for cash. Which book of prime entry is used first?

A Purchases journal
B General journal
C Cash book
D 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 credit customer returned goods previously sold to them. Which book of prime entry is used?

A Purchases returns journal
B Sales returns journal
C General journal
D Cash book

12. The owner withdrew goods costing $350 for private use. Which book of prime entry records this?

A Sales journal
B Purchases journal
C Cash book
D General journal

13. Cash sales for the day were $1260 according to the till roll. Which book of prime entry is used?

A Sales journal
B Cash book
C General journal
D Sales returns journal

14. Which item should be recorded in the purchases journal?

A Goods for resale bought on credit
B Office equipment bought on credit
C Goods bought for cash
D Motor expenses paid by cheque

15. Which item should not be recorded in the sales journal?

A Goods sold on credit
B Goods sold to a credit customer
C Old office equipment sold on credit
D Inventory sold on credit

16. Which transaction is most likely to be recorded in the general journal?

A Goods sold on credit
B Equipment bought on credit
C Cash received from customer
D Goods returned by customer

17. Which book records goods returned to credit suppliers?

A Purchases returns journal
B Sales returns journal
C Purchases journal
D Sales journal

18. Which sequence is correct for a credit purchase of goods for resale?

A Supplier’s invoice → sales journal → customer’s account
B Credit note received → purchases journal → sales account
C Supplier’s invoice → purchases journal → supplier’s account
D Receipt issued → cash book → supplier’s account

19. What is the double entry for the total of the sales journal?

A Debit sales, credit trade receivables
B Debit trade payables, credit sales
C Debit sales returns, credit trade receivables
D Debit trade receivables, credit sales

20. What is the double entry for the total of the purchases journal?

A Debit trade receivables, credit purchases
B Debit purchases, credit trade payables
C Debit sales, credit trade payables
D Debit purchases returns, credit trade payables

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. What is the double entry for the total of the sales returns journal?

A Debit trade receivables, credit sales returns
B Debit purchases returns, credit trade payables
C Debit sales returns, credit trade receivables
D Debit sales, credit trade receivables

22. What is the double entry for the total of the purchases returns journal?

A Debit trade payables, credit purchases returns
B Debit purchases returns, credit trade payables
C Debit purchases, credit trade payables
D Debit trade receivables, credit purchases returns

23. Why is the cash book unusual compared with most other books of prime entry?

A It records only credit transactions.
B It is never posted to the ledger.
C It records only non-current asset transactions.
D It is both a book of prime entry and part of the double entry system.

24. In a three-column cash book, where is discount allowed normally entered?

A Credit side, discount column
B Debit side, discount column
C Debit side, bank column
D Credit side, cash column

25. A customer owing $1000 paid by cheque after deducting $20 cash discount. Which book of prime entry records both the cheque and the discount?

A Cash book
B Sales journal
C General journal
D Sales returns journal

26. A supplier was paid $1470 by cheque in full settlement of a debt of $1500. Which book of prime entry records both the payment and the discount?

A Purchases journal
B General journal
C Cash book
D Purchases returns journal

27. Cash of $500 was paid into the business bank account. Which cash book entry is correct?

A Debit cash $500, credit bank $500
B Debit bank $500, credit cash $500
C Debit drawings $500, credit cash $500
D Debit bank $500, credit sales $500

28. Cash of $300 was withdrawn from the bank for office use. Which cash book entry is correct?

A Debit cash $300, credit bank $300
B Debit bank $300, credit cash $300
C Debit cash $300, credit capital $300
D Debit drawings $300, credit bank $300

29. Bank charges of $85 appeared on the bank statement but had not been recorded. Which book of prime entry should be updated?

A Sales journal
B Purchases journal
C Cash book
D General journal only

30. A cheque received from a credit customer was later dishonoured. Which entry is required?

A Debit bank, credit customer
B Debit sales returns, credit bank
C Debit customer, credit sales
D Debit customer, credit bank

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. Which transaction would not be recorded in the general journal?

A Correction of an error
B Owner withdrew goods for private use
C Goods sold on credit
D Opening entry for a new set of books

32. A purchase invoice for goods, $500, was entered in the purchases journal as $50. Which book is used to correct the error?

A General journal
B Sales journal
C Purchases returns journal
D Cash book

33. Which document is prepared by the seller when goods are sold on credit?

A Debit note
B Invoice
C Statement of account
D Goods received note

34. Which document is a monthly summary rather than a source document for one specific transaction?

A Sales invoice
B Credit note
C Receipt
D Statement of account

35. Which document is issued to a customer after cash is received?

A Invoice
B Receipt
C Debit note
D Goods received note

36. Which document may be prepared by the buyer when goods are returned to a supplier?

A Credit note
B Receipt
C Debit note
D Sales invoice

37. Which document is prepared by the seller when a customer returns goods?

A Debit note
B Credit note
C Statement of account
D Purchases invoice

38. Stationery is bought on credit for office use. Which book of prime entry should record the transaction?

A Purchases journal
B Sales journal
C Cash book
D General journal

39. Goods with a list price of $5000 are bought on credit. Trade discount is 15%, and settlement discount of 3% is available if payment is made within 10 days. What amount is entered in the purchases journal?

A $4122.50
B $4250
C $4850
D $5000

40. Goods with a list price of $3600 are sold on credit. Trade discount is 12.5%, and settlement discount of 4% is offered. What amount is entered in the sales journal?

A $3024
B $3150
C $3456
D $3600

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 posting is made from an individual sales invoice?

A Debit sales account
B Debit customer’s account
C Credit customer’s account
D Debit purchases account

42. Which document supports an entry on the debit side of the sales returns account?

A Credit note issued
B Debit note received from supplier
C Supplier’s invoice
D Receipt issued

43. Which document supports an entry on the credit side of the purchases returns account?

A Sales invoice issued
B Receipt received
C Credit note received from supplier
D Bank statement

44. What is the main difference between an invoice and a statement of account?

A An invoice summarises all transactions for a period; a statement records one sale only.
B An invoice is prepared only by the buyer; a statement is prepared only by the bank.
C An invoice is evidence of one credit transaction; a statement summarises transactions and balance due.
D An invoice is used only for cash transactions; a statement is used only for returned goods.

45. Which book of prime entry normally includes a narrative after each entry?

A Sales journal
B Purchases journal
C General journal
D Sales returns journal

46. Which transaction is recorded in the cash book but not in the sales or purchases journals?

A Goods sold for cash
B Goods sold on credit
C Goods bought on credit
D Goods returned by a credit customer

47. The total of the discount received column in the cash book is posted to which account?

A Debit discount allowed
B Credit discount received
C Debit discount received
D Credit trade receivables

48. Trade discount is allowed on a sale of goods. How is the trade discount recorded?

A It is debited to discount allowed.
B It is credited to discount received.
C It is not recorded separately in the ledger.
D It is entered in the cash book discount column.

49. Which transaction would be recorded first in the purchases returns journal?

A Customer returns goods to the business
B Business returns goods to a supplier
C Owner withdraws goods for personal use
D Supplier sends a statement of account

50. Equipment is bought by cheque. Which book of prime entry records the transaction?

A Purchases journal
B Cash book
C General journal
D Sales journal

1. B
   Purchases journal records the net invoice value after trade discount only.
   $2400 − 10% = $2160. Cash discount is ignored until payment is made.

2. A
   Sales journal records credit sales after trade discount only.
   $1800 − 20% = $1440.

3. C
   Sales returns are recorded at the original net selling price.
   $600 − 10% = $540.

4. D
   Purchases returns are recorded at the original net purchase price.
   $800 − 25% = $600.

5. C
   A motor van is a non-current asset, not goods for resale. Credit purchase of a non-current asset is recorded in the general journal.

6. C
   An old machine is a non-current asset. Sale of a non-current asset on credit is recorded in the general journal, not the sales journal.

7. D
   A statement of account is a summary document. It is not usually used to make one original book entry.

8. A
   The sales journal is written from copies of sales invoices issued to credit customers.

9. B
   For goods returned to a supplier, the strongest evidence is the credit note received from the supplier.

10. C
    Goods bought for cash are recorded in the cash book, not the purchases journal. Purchases journal is for credit purchases of goods.

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. B
    Goods returned by credit customers are recorded in the sales returns journal.

12. D
    Owner’s drawings of goods are recorded in the general journal: debit drawings, credit purchases.

13. B
    Cash sales are recorded in the cash book because cash is received immediately.

14. A
    Purchases journal records goods for resale bought on credit.

15. C
    Old office equipment sold on credit is not inventory. It is recorded in the general journal.

16. B
    Equipment bought on credit is a non-current asset purchase. It goes in the general journal.

17. A
    Goods returned to credit suppliers are recorded in the purchases returns journal.

18. C
    Correct sequence: supplier’s invoice → purchases journal → supplier’s account.

19. D
    Total of sales journal: debit trade receivables, credit sales.

20. B
    Total of purchases journal: debit purchases, credit trade payables.

21. C
    Total of sales returns journal: debit sales returns, credit trade receivables.

22. A
    Total of purchases returns journal: debit trade payables, credit purchases returns.

23. D
    The cash book is both a book of prime entry and part of the double entry system.

24. B
    Discount allowed is entered on the debit side of the three-column cash book.

25. A
    The cash book records the cheque received and the discount allowed.

26. C
    The cash book records the cheque payment and discount received.

27. B
    Cash paid into bank is a contra entry: debit bank, credit cash.

28. A
    Cash withdrawn from bank for office use: debit cash, credit bank.

29. C
    Bank charges reduce the bank balance, so the cash book must be updated.

30. D
    Dishonoured cheque reverses the bank receipt: debit customer, credit bank.

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. C
    Goods sold on credit are recorded in the sales journal, not the general journal.

32. A
    Correction of an error is recorded in the general journal.

33. B
    The seller prepares an invoice when goods are sold on credit.

34. D
    A statement of account summarises transactions over a period. It is not one transaction’s source document.

35. B
    A receipt is issued after cash is received.

36. C
    A buyer may prepare a debit note when returning goods to a supplier.

37. B
    The seller prepares a credit note when a customer returns goods.

38. D
    Stationery is not goods for resale. Credit purchase of stationery is recorded in the general journal.

39. B
    Purchases journal records after trade discount only.
    $5000 − 15% = $4250. Settlement discount is ignored.

40. B
    Sales journal records after trade discount only.
    $3600 − 12.5% = $3150. Settlement discount is ignored.

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. B
    An individual sales invoice is posted to the debit side of the customer’s account because the customer owes money.

42. A
    A credit note issued supports sales returns, which are debited.

43. C
    A credit note received from a supplier supports purchases returns, which are credited.

44. C
    An invoice records one credit transaction. A statement of account summarises invoices, payments, returns and the balance due.

45. C
    The general journal normally includes a narrative explaining the entry.

46. A
    Goods sold for cash are recorded in the cash book, not the sales journal.

47. B
    The total discount received column is posted to the credit side of the discount received account.

48. C
    Trade discount is deducted before recording. It is not recorded separately in the ledger.

49. B
    Purchases returns journal records goods returned by the business to suppliers.

50. B
    Equipment bought by cheque is recorded in the cash book because bank is immediately affected.

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.

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.