Explain the double-entry system and the books of prime entry used by a trading business.

1. 1 · Define double entry. Every transaction is recorded with an equal debit and credit in two or more accounts.
2. 2 · Give the rules. Assets, expenses, drawings: debit to increase. Liabilities, income, capital: credit to increase.
3. 3 · Explain the journal. Book of original entry: date, Dr account, Cr account, amounts, narration.
4. 4 · Describe the day books.
   • Sales day book: credit sales.
   • Purchases day book: credit purchases.
   • Returns inwards and returns outwards day books.
   • Cash book: cash and bank receipts and payments.
5. 5 · Describe the general journal. Opening, adjusting, closing and correcting entries; bad debts; credit purchases of non-current assets.
6. 6 · Show one entry. Example: goods sold on credit to Ruwan Stores Rs. 180,000: Dr Ruwan Stores, Cr Sales.
7. 7 · Conclude. Books of prime entry sort transactions so that posting to the ledger is fast and accurate.

Scoring tip: Show one short journal entry in proper format; it proves you can apply the rules.