Grade 10 Business Studies – Source Documents and Books of Original Entry (18 Lessons) Quiz
1. Which document would a retailer issue to a customer as proof of payment received immediately for cash sales in a Kenyan shop?
A receipt is issued as proof that cash has been received at the time of sale. An invoice requests payment, a credit note reduces a previous sale, and a delivery note records goods delivered.
2. Which book of original entry is used to record all credit sales before posting to the ledger?
The sales day book (sales journal) records all credit sales. Cash book records cash transactions, sales returns book records returns from customers, and purchases day book records credit purchases.
3. What is the main source document for recording purchases made on credit from a supplier in Kenya?
A supplier's invoice shows the details and amount owed for goods bought on credit and is the source document for entering credit purchases. A credit note reduces amounts, while a sales receipt and cheque stub are different documents.
4. Which source document would be used to show that goods sent back to a supplier have been recorded?
A credit note is issued by the supplier or seller to the buyer to acknowledge goods returned and reduce the amount owed. A debit note is issued by the buyer to request a credit; invoice and receipt are different.
5. Which book of original entry records money received and money paid, and acts as a ledger for cash and bank balances?
The cash book records all cash and bank transactions and serves as both a journal and ledger for cash/bank accounts. Petty cash book is for small expenses; purchase day book and journal serve other purposes.
6. What is the purpose of a debit note issued by a buyer in Kenya?
A debit note is sent by the buyer to the supplier to request a reduction in the amount payable, often due to defective goods or overcharging. It is not a receipt or proof of delivery.
7. Which book would record a company's purchases of stationery paid for in cash in a Kenyan school office?
Small cash payments like stationery are recorded in the petty cash book. Purchases day book is for credit purchases, while sales books record sales transactions.
8. Which source document is most likely to be used as proof when a customer withdraws money from a bank in Kenya?
A bank teller slip or the bank statement entry shows details of withdrawals and is used as a source document for bank cash payments. Invoices, purchase orders, and delivery notes are unrelated.
9. When goods previously sold on credit are returned by the customer, which book records the transaction?
Goods returned by customers (sales returns) are entered in the sales returns book (returns inwards). Purchases returns book is for goods returned to suppliers.
10. Which item is NOT typically a source document in Kenyan business transactions?
A personal school timetable is not related to business transactions and cannot be used as a source document. Invoices, receipts, and cheque stubs are valid source documents.
11. What is the main reason businesses keep books of original entry?
Books of original entry record transactions chronologically and summarize them before transferring to ledger accounts. They do not replace source documents or financial statements and are unrelated to storing goods.
12. Which book would record a bank cheque received from a customer as payment for a credit sale?
When a cheque is received and banked, the cash book records the bank receipt. The sales day book records the original credit sale; the journal is for non-routine entries.
13. Which source document shows the details of goods sent by a supplier but not the amount charged?
A delivery note accompanies goods and lists items delivered but usually does not show the price. The invoice shows amounts, receipts show payments, and credit notes adjust amounts.
14. In Kenyan practice, which document is used to claim input VAT from KRA when goods are bought on credit?
A tax invoice showing VAT details is required to claim input VAT from the Kenya Revenue Authority. Delivery notes and receipts without VAT details are insufficient.
15. Which book of original entry is used to record all purchases returns (goods returned to suppliers)?
Goods returned to suppliers are recorded in the purchases returns book (returns outwards). Sales returns book is for customer returns.
16. A business issues a cheque to pay a supplier. Which source document best supports this payment when recorded in the books?
The cheque counterfoil or bank statement showing the cheque payment is the source document proving payment. An invoice or delivery note shows the purchase but not the actual payment.
17. Which entry in the cash book would record money taken from the till and deposited into the business bank account?
Transferring cash to the bank is recorded as a contra entry: credit cash (decrease) and debit bank (increase) in the cash book. Other options are incorrect bookkeeping treatments.
18. Which book of original entry would you use to record adjustments and non-routine transactions like depreciation or correction of errors?
The journal records non-routine and adjusting entries such as depreciation, accruals, and corrections. Sales and purchases day books are for routine credit transactions.
19. What should a business keep with each sales invoice to verify that payment has been received later by bank transfer (e.g., M-PESA or RTGS)?
To verify payment by bank transfer or M-PESA, the business should keep the transfer confirmation or bank statement entry as proof linked to the invoice. Delivery notes, quotations, and purchase orders are not proof of payment.
20. Which of the following is a characteristic of a good source document?
A good source document is original, reliable, dated, and contains full transaction details. The other options describe poor or invalid documentation practices.
21. When posting from the sales day book to the ledger, what key information must be included for each entry?
When posting sales day book totals to the ledger or individual customer accounts, include the customer's name, invoice amount, and date for clear traceability. Other sets are irrelevant to posting credit sales.
22. A business receives a credit note from a supplier. How should this affect the purchases ledger account?
A credit note reduces the amount owed, so the supplier's account in the purchases ledger is credited (reducing the balance). It is not recorded only in the cash book.
23. Which document acts as both a source document and a record when payments are made from petty cash?
Petty cash vouchers support and record small cash payments; they provide details, authorization, and are kept as source documents. Sales invoices and tax invoices serve other purposes.
24. Why is it important for a Kenyan business to keep source documents for a number of years?
Keeping source documents provides evidence during audits, supports tax investigations by KRA, and justifies figures in financial statements. The other options are irrelevant.
25. Which of these is a correct sequence when processing a transaction in accounting?
Transactions are first supported by source documents, recorded in books of original entry, posted to the ledger, and used to prepare a trial balance. The other sequences are out of order.
26. Which book records both receipts and payments made through the business bank account in Kenya?
The cash book has bank and cash columns to record receipts and payments through the bank account. Sales and purchases books do not record bank transactions.
27. What is a contra entry in the cash book?
A contra entry records transfers between cash and bank and appears on both debit and credit sides of the cash book. It does not cancel purchases or reject invoices.
28. Which document would a buyer keep to show a supplier agreed to reduce the selling price after an overcharge was discovered?
A credit note confirms the supplier has reduced the amount payable due to overcharge or returns. Delivery notes and quotations do not evidence a price reduction.