What is a Sales Day Book?
A Sales Day Book, also known as a Sales Journal or Credit Sales Book, is a subsidiary book where all credit sales that a business undertakes are recorded before being posted to the general ledger. This book is essential for companies that frequently deal with a large volume of credit transactions. It captures detailed information about each sale, including the date, customer name, invoice number, and the amount involved.
Key Components
- Date: The date when the sale was made.
- Customer Name: The name of the customer who purchased goods or services on credit.
- Invoice Number: A unique identifier for the transaction.
- Amount: The total value of the sale.
Examples
-
Retail Store: On April 5th, a retail store sells goods worth $1,000 on credit to customer ABC Corp. This transaction would be recorded in the Sales Day Book under the date April 5th, customer ABC Corp., with the corresponding invoice number and amount $1,000.
-
Manufacturing Company: A manufacturing company sells raw materials worth $5,000 on credit to XYZ Ltd. on May 10th. The transaction is entered into the Sales Day Book with the date May 10th, customer XYZ Ltd., invoice number, and the amount $5,000.
Frequently Asked Questions (FAQs)
What is the purpose of a Sales Day Book?
The primary purpose of a Sales Day Book is to record all credit sales transactions in a centralized manner, thus providing detailed records which can be referred to before posting to the general ledger. This ensures that the financial records are accurate and comprehensive.
How is a Sales Day Book different from a Sales Ledger?
A Sales Day Book is used to first record details of credit sales transactions whereas a Sales Ledger, or Accounts Receivable Ledger, contains accounts of individual customers which show the outstanding amounts they owe to the business.
Is the Sales Day Book useful for cash sales?
No, the Sales Day Book is exclusively used for credit sales. Cash sales are typically recorded directly in the cash book or cash sales section of a sales ledger.
Can the Sales Day Book be maintained electronically?
Yes, numerous accounting software packages allow businesses to maintain an electronic Sales Day Book, making the recording and tracking of credit sales much easier and more efficient.
Related Terms
- Accounts Receivable: The money owed by customers to the business for sales made on credit.
- Sales Journal: Another term for a Sales Day Book, indicating its function as a specialized journal for credit sales.
- General Ledger: The main accounting ledger that includes all financial transactions of a business, where posted entries from the Sales Day Book are finally recorded.
- Invoice: A document issued to a customer, detailing the goods or services provided and including the amount owed.
Online References
- Investopedia: Understanding Sales Journals
- Accounting Coach: Sales Journal
- Small Business Chron: Definition of a Sales Ledger
Suggested Books for Further Studies
- “Principles of Accounting” by Jerry J. Weygandt, Paul D. Kimmel, and Donald E. Kieso
- “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper
- “Financial Accounting” by Robert Libby, Patricia Libby, and Frank Hodge
Accounting Basics: “Sales Day Book” Fundamentals Quiz
Thank you for embarking on this journey through our comprehensive accounting lexicon and tackling our challenging sample exam quiz questions. Keep striving for excellence in your financial knowledge!
