What are Books of Original Entry?

Books of original entry refers to the accounting journals in which business transactions are initially recorded. The information in these books is then summarized and posted into a general ledger, from which financial statements are produced. Each accounting journal contains detailed records for the types of accounting transactions pertaining to a specific area. Examples of these accounting journals are the cash journal, general journal, purchase journal, and sales journal.

The general ledger is not considered a book of original entry if it only contains summarized entries posted to it from one of the underlying accounting journals. However, if transactions are recorded directly into the general ledger, it can be considered one of the books of original entry.

Are Books of Original Entry Used in Computerized Accounting Systems?

The books of original entry concept only applies to manual record keeping. A computerized accounting system no longer makes reference to any of the accounting journals, instead recording all business transactions in a central database.

Advantages of Books of Original Entry

There are multiple advantages associated with the use of books of original entry; they are as follows:

Easily searchable. Books of original entry are extremely useful for investigating individual accounting transactions. Anyone using these records can easily search through them by date to find what they need. Furthermore, transactions are recorded in different books depending on the transaction type (such as sales transactions being entered in the sales journal), making it even easier to drill down through the various books to find specific transaction records.
Easy reference for auditors. Books of original entry are commonly accessed by auditors, who verify a selection of business transactions to ensure that they were recorded correctly, as part of their audit procedures. It is especially easy to conduct these investigations, because the transactions recorded in the books of original entry were made in chronological order.
Improves reconciliations. Because books of original entry are well-organized, they make it easier to reconcile an organization’s cash balances with the statements received from its banks and lenders. This makes it easier to identify discrepancies and make adjustments to ensure a high degree of recordkeeping accuracy.
Logical division of work. Different accounting staff can be held responsible for maintaining different books of original entry, which promotes specialization within the accounting department. This reduces the workload on any one person, and also improves a firm’s system of internal controls.