Accounting Questions and Answers

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced.

The main books of prime entry are:

• Sales day book.
• Purchase day book.
• Sales returns day book.
• Purchases returns day book.
• Bank Book.
• Cash Receipts Book.
• Cash Payments Book.
• Petty Cash Receipts Book.

Debit asset account with 5000 and credit  capital account with 5000. 

he types of sources documents are:

• Purchase order.
• Cash receipt.
• Invoice.
• Cash register.
• Tapes.
• Credit.
• Debit note.
• Deposit slips

When closing stock is overstated, the cost of goods available for sale will be high and the gross profit low. The higher the cost of sales, the lower the gross profit.

A trade discount represents the reduction in cost of goods or services sold in the business environment. Trade discounts can help small businesses save money when purchasing goods or services from suppliers. Many suppliers require small businesses to pay within a specific time frame to receive the trade discount.

One of the main reasons why firms offer trade discounts is to encourage debtors to clear their outstanding balances quickly.