Paper 2 Answering Technique
Paper 2 Answering Technique: Books of Prime Entry
This guide shows how to answer Paper 2 structured and essay questions on the Books of Prime Entry chapter accurately, neatly and strategically to earn method and presentation marks.
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1. Read the question and source documents carefully
- Read the whole set of transaction statements first, then underline the date, account names and amounts before recording so that no detail is missed.
- Identify the type of source document: invoice for credit purchases or sales, credit note for returns, receipt for money received, cheque counterfoil for payments by cheque, voucher for petty payments.
- Watch for key words such as "on credit", "in cash", "by cheque", "drawings", "additional capital" and "adjustment" because these words decide the correct book of prime entry.
- Decide whether the transaction involves cash, bank or credit before choosing where to record it, because an error here makes the whole answer wrong.
2. Choose the correct book of prime entry
- Use the General Journal for the opening entry, credit purchase and sale of non-current assets, drawings of goods and assets, additional capital other than cash and bank, closing entries, adjustments, correction of errors and realisation.
- Use the Purchases Journal and Sales Journal only for credit purchases and sales of goods; the Purchases Returns and Sales Returns Journals only for returns of goods.
- Record all cash and bank receipts and payments in the three-column Cash Book, including discount allowed and discount received; small petty expenses go into the Petty Cash Book under the imprest system.
- Remember a common trap: a non-current asset bought on credit goes into the General Journal, not the Purchases Journal, because it is not trading stock.
3. Draw the format and present neatly
- Draw the full General Journal format with Date, Particulars, Folio, Debit and Credit columns; write the debited account to the left and indent the credited account slightly to the right.
- Write the narration (a short explanation) under each General Journal entry because marks are given for it; never leave it out.
- For the three-column Cash Book, set out Discount Allowed, Cash and Bank on the debit side, and Discount Received, Cash and Bank on the credit side.
- Fill the folio column with the correct ledger reference to show cross-posting; do not leave the folio column blank because it is part of the format.
- For the Petty Cash Book, provide Receipts, Date, Particulars, Voucher No., Total Payment and analysis columns by type of expense.
4. Show your working for method marks
- Show every calculation step such as column totals, discounts and balancing so that method marks are still awarded even if the final figure is wrong.
- Balance the Cash Book clearly: enter balance c/d and balance b/d, then state the position of the Cash balance (always debit) and the Bank balance (debit, or credit if overdrawn).
- Total both discount columns but do not balance them; transfer the discount totals to the discount accounts in the ledger.
- In the Petty Cash Book, total each analysis column, ensure the sum of all analysis columns equals the total payment, then record the reimbursement that restores the imprest to its original amount.
- For the opening entry in the General Journal, make sure total debit equals total credit before moving on.
5. Manage time and do a final check
- Allocate time according to the number of parts in the question and do not spend too long on a single book.
- Answer the parts you are most confident with first to bank early marks, then return to the harder parts.
- Check again: dates are correct, amounts match the documents, debit and credit are not reversed, and folio columns are filled in.
- Write neatly and use the correct account format because clear presentation helps the examiner trace your working steps.
| Particulars | Debit | Credit |
|---|---|---|
| Premises | 50,000 | |
| Fittings | 10,000 | |
| Stock | 5,000 | |
| Bank | 8,000 | |
| Cash | 2,000 | |
| Creditor | 5,000 | |
| Capital | 70,000 | |
| Total | 75,000 | 75,000 |
Debited accounts are written first; credited accounts are indented to the right. Total debit must equal total credit.
What is the difference between transactions recorded in the General Journal and the Special Journals?
Special Journals record repetitive, similar transactions such as credit purchases, sales and returns of goods and cash receipts and payments. The General Journal records transactions unsuitable for Special Journals, namely the opening entry, credit purchase and sale of non-current assets, drawings, additional capital other than cash and bank, closing entries, adjustments, correction of errors and realisation.
How do I state the position of the balances in the three-column Cash Book?
After balancing, the balance b/d of the Cash column is always on the debit side because cash is an asset. The Bank balance may be on the debit side when there is a positive bank balance, or on the credit side when the bank is overdrawn. State the position of each balance clearly.
Do I need to write the narration in the General Journal?
Yes. A short narration under each General Journal entry explains the transaction recorded and part of the presentation marks is given for it. Write a brief but complete narration and do not leave it out.
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