Accounting system makes use of books of prime entry, nominal ledgers and financial statements to provide useful information.

1       Books of Prime Entry

Book of prime entry is used to record day to day transactions.


Books of prime entry are sales day book, purchase day book and cash book.

It helps delegating tasks to clerical staff that do not have through knowledge of accounting.

It helps separation of duties for recording various transactions such as sale and purchase.

It helps classification of different transactions such as sales and purchase.

2       Nominal Ledger

Nominal ledger is used to record revenues & expenses and assets & liabilities so that financial performance and position of the entity can be known.

Revenues & expenses and assets & liabilities are recorded in their respective accounts.

Revenues & expenses account is used to prepare the statement of comprehensive income. It helps determining financial performance.

Assets & liabilities are used to prepare the statement of financial position. It helps determining financial position.

Statement of cash flows and statement of changes in equity can be prepared from complied statement of comprehensive income and statement of financial position.

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