What is the primary purpose of a book of prime entry?
Correct answer: A. To record transactions first in chronological order
- A. To record transactions first in chronological order
- B. To summarise balances after ledger posting
- C. To calculate the final profit or loss
- D. To show the financial position at year-end
Explanation
A book of prime entry is the first formal accounting record of a transaction, usually based on a source document. The ledger is prepared from these initial records, so it is not the book of first entry.
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About Double Entry and Books of Prime Entry
Double entry records every transaction with equal debit and credit entries, based on the accounting equation and the classification of assets, liabilities, capital, income and expenses. Books of prime entry include the sales, purchases, returns and cash books, journal, and source documents used before transactions are posted to ledger accounts.
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