Cambridge IGCSE Accounting: Sources and Recording of Data — Revision Notes

Condensed for the final weeks. For the full explanation, use the Sources and Recording of Data study guide.

The double entry rule

Debit the receiving account, credit the giving account. Not a formula to memorise — practise deriving the entry from first principles for a genuine mix of transactions (cash purchase, credit sale, return, owner’s drawing) until it is automatic. No folio columns or three-column running-balance accounts are required.

Business documents — recognise and use, not redraw

Document	Purpose
Invoice	Requests payment for goods/services supplied
Debit note	Requests a correction (e.g. undercharge)
Credit note	Corrects an overcharge or records returned goods
Statement of account	Summarises the account’s transactions and balance
Cheque / receipt	Records/confirms payment

Know why each is issued and how debit note and credit note differ in direction — this is tested more than production from scratch.

The seven books of prime entry

Cash book, petty cash book, sales journal, purchases journal, sales returns journal, purchases returns journal, general journal. A book of prime entry is where a transaction is FIRST recorded from a source document; the ledger is where it ends up after posting — keep this distinction sharp.

The cash book is unusual: it is simultaneously a book of prime entry AND a ledger account for cash and bank — the only one of the seven with this dual role.

Worked example: tracing one transaction end to end

A credit sale of goods, later partly returned by the customer.

Step 1 (sale):     invoice issued -> recorded in the sales journal
                   (book of prime entry) -> posted to the customer's
                   account in the sales ledger and to the sales
                   account in the nominal ledger
Step 2 (return):   credit note issued -> recorded in the SALES
                   RETURNS journal (NOT reversed directly in the sales
                   journal) -> posted to the customer's account
                   (credit side) and the sales returns account

Forgetting that a sales return goes in the sales returns journal — not reversed directly in the sales journal — is one of the most common structured-question errors on this topic.

The imprest system: a calculation to drill

Float minus vouchers equals amount to restore. Practise these reimbursement calculations until fast and reliable — marks are lost here through arithmetic slips, not conceptual misunderstanding.

Trade discount vs cash discount

A frequently confused pair: trade discount is a reduction given at the point of sale (often for bulk purchase) and is never entered in the accounts at all — the invoice simply shows the discounted price. Cash discount is a reduction offered for prompt payment and IS recorded in the accounts, in the discount allowed/discount received columns of the cash book. Confusing the two — for example, trying to post trade discount as a ledger entry — is a common structured-question error.

Ledger divisions

The ledger is divided into the sales ledger (customers’ personal accounts), the purchases ledger (suppliers’ personal accounts), and the nominal (general) ledger (all other accounts — assets, expenses, income, capital). Knowing which ledger a given account belongs in is tested directly alongside the double-entry postings themselves, particularly in scenario questions that present a mix of customer, supplier and expense transactions together.

Exam traps

• Spending revision time on folio columns or three-column running-balance formats, which the syllabus explicitly does not require.
• Confusing a book of prime entry with a ledger account.
• Posting a sales return directly against the sales journal instead of the sales returns journal.
• Miscalculating imprest reimbursement through arithmetic error rather than conceptual confusion.

The cash book’s dual role, explained

Most books of prime entry get posted TO a ledger account — but the cash book IS a ledger account (for cash and bank) as well as being where cash/bank transactions are first recorded. This is why the cash book is never itself “posted” to a separate cash or bank ledger account the way the other six books of prime entry are posted to their respective ledgers — understanding this dual role prevents a common structured-question error of treating the cash book like an ordinary book of prime entry that needs a separate posting step.

Practising the full document-to-ledger trace

Because Paper 2’s structured questions often present a mixed bag of source documents in one scenario, practise identifying, for each document type, its correct book of prime entry and final ledger destination as a fast, automatic three-step lookup: document → book of prime entry → ledger account. Building this as muscle memory before the exam is more valuable than memorising each of the seven books’ definitions in isolation, since scenario questions rarely test a single book on its own.

Self-test

1. State the double entry rule in one sentence.
2. What is the key difference between a debit note and a credit note?
3. Which book of prime entry also functions as a ledger account?
4. Where should a sales return be recorded — and where is it a common error to record it instead?
5. State the imprest system’s reimbursement formula.

Answers: 1. Debit the receiving account, credit the giving account. 2. A debit note requests a correction such as an undercharge; a credit note corrects an overcharge or records returned goods — opposite directions. 3. The cash book. 4. It should be recorded in the sales returns journal; a common error is reversing it directly in the sales journal instead. 5. Float minus vouchers equals the amount needed to restore the float.