PRC-1 · Chapter 2 · Question 50 of 100
Which of the following statements best explains why medium-to-large businesses utilize 'books of prime entry' rather than posting source documents directly into the general ledger?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) They group and summarize large volumes of similar transactions, significantly reducing clutter in the main ledgers.
Explanation
Books of prime entry act as an initial sorting and summarizing mechanism. By totaling similar transactions (like all credit sales) for the period, only the totals are posted to the main ledgers, making the system highly efficient.
More Books of Prime Entry MCQs
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- Q55Which of the following is NOT classified as a book of prime (original) entry?
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