Cash Books & The General Journal (Cambridge (CIE) IGCSE Accounting)

The Cash & Petty Cash Books

What are the cash book and the petty cash book?

• The cash book and petty cash book are books of prime entry

• They record all transactions which involve the exchange of cash

  • Petty cash is used for small valued transactions

• The book-keeper gets the information from:

  • Receipts

  • Cheques & cheque counterfoils

  • Paying-in slips

  • Bank statements

  • Petty cash vouchers

• The cash book and petty cash book are also part of the double entry system

  • This is different to the other books of prime entry

The General Journal

What is the general journal?

• The general journal is also referred to as, simply, “the journal”

• The journal is used to record all transactions that do not go into the other books of prime entry, such as:

  • Opening balances when a business is first created

  • Introducing capital

  • Taking drawings

  • Purchasing a non-current asset

  • Selling a non-current asset

  • Correcting errors

  • Transferring balances to the income statement

How do I make a journal entry for a transaction?

• STEP 1
  Enter the date

• STEP 2
  Enter the name of the account(s) that need to be debited in the details column

  • It is conventional to enter the debit accounts before the credit accounts

• STEP 3
  Enter the corresponding values in the debit column

• STEP 4
  Enter the name of the account(s) that need to be credited in the details column

  • It is conventional to leave an indent for the credit entries

• STEP 5
  Enter the corresponding values in the credit column

  • Make sure the total debit amount is equal to the total credit amount

• STEP 6
  Write a narrative for the journal entry

  • This is a brief explanation of the transaction

  • This is especially useful for non-regular transactions and for correction of errors