9706 · 1.2.1
The accounting system — FAQ
Frequently asked questions for 9706 The accounting system. Direct answers first, then deeper explanation — then practise with marking.
Are the books of prime entry part of the double entry system?
This is a common misconception. The books of prime entry (or day books) are memorandum records. They are the first place transactions are written down, but they are not part of the double entry ledger system itself. The double entry (debit and credit) takes place when the totals and individual items are posted from these books into the ledger accounts.
Do I need to post every single invoice from the Sales Day Book to the General Ledger?
No. The system is designed for efficiency. You only post the period's total from the Sales Day Book to the General Ledger. This single posting is a debit to the Sales Ledger Control Account and a credit to the Sales Account. The individual invoices are posted to the individual customer accounts in the subsidiary Sales Ledger, not the General Ledger.
Is the trial balance one of the main financial statements?
No, it is not. The trial balance is a crucial internal working document prepared before the financial statements. Its purpose is to check that the total debits in the general ledger equal the total credits. The main financial statements, which are prepared for external users, are the Statement of Profit or Loss, the Statement of Financial Position, and the Statement of Cash Flows.