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Please correct me that we make entries in our books in following sequence.
1) Firstly we record the first entry in our Prime Books.
2) Secondly we enter the “Totals” from Prime Books into our Receiveable Ledger (nominal T account). In this account we only record the Total amounts of each items.
3) Nominal T-Ledgers of Receivables and Payables are always called “Control Accounts” because they control the balances in the individual T-Ledgers of each receivable and payable accounts.
4) Thirdly we enter the “Individual Balances” of all receivables and payables from Prime Books into our individual T-Ledgers (i.e sales ledger or purchase ledger).
5) Fourthly we make a list of balances of all receivables and payables from individual T-Ledgers.
6) Financial Statements are made using the balances of items in each Nominal T-Ledgers.
Sorry to ask for such a lengthy question!
1. Correct (except that they are called the ‘Books of Prime Entry’.
2. The receivables ledger is not a nominal/general ledger account. We record the totals from the books of prime entry in the nominal/general ledger accounts.
3. Correct (except they are not called t-ledgers – they are called t-accounts. Ledgers are books, not accounts.)
4. Correct.
5. Correct.
6. The financial statements are produced using the balances on the control accounts (which will be equal to the totals of the balances in the receivables and payables ledgers).
Do look again at the diagram that I draw at the end of the lectures on Books of Prime Entry.
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