- What is a journal in accounting?
- Explain the purpose of a ledger in accounting.
- State the difference between a journal and a ledger.
- Name three other common books of accounts used in bookkeeping.
- What is a cash book, and why is it important?
- Describe the purpose of a sales book (sales journal).
- What is recorded in a purchases book (purchases journal)?
- Give an example of what would be recorded in a cash book.
- Define trade receivables and explain their importance to a business.
- What are trade payables, and why do they matter?
- How does the information in a ledger help a business owner?
- Why should a business maintain a purchases book?
- Give an example of when a sales book would be used.
- Why is it important to keep books of accounts organized and up-to-date?
ANSWERS
- A journal is the book where all financial transactions are first recorded in chronological order.
- A ledger organizes transactions by specific accounts to track totals for each.
- The journal records transactions as they happen; the ledger summarizes them by account.
- Cash book, sales book, purchases book.
- The cash book records all cash transactions; it helps track cash inflows and outflows.
- The sales book records all credit sales made by the business.
- The purchases book records all credit purchases made by the business.
- Recording money received from a customer in cash.
- A trial balance checks if the total debits equal total credits, confirming that the books are balanced.
- Trade receivables are money owed to the business by customers; they are important for managing cash flow.
- Trade payables are money the business owes to suppliers; they matter for managing debts and maintaining supplier relationships.
- The ledger shows account balances, which help the owner understand financial status.
- To track and manage credit purchases effectively.
- When recording a credit sale to a customer.
- To ensure accurate financial records and compliance with laws.
