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When a businessman starts their company, one of the primary things they do is keep a track of their everyday transactions. These transactions are recorded on a timely basis (depending on the nature of their business) in a book before they are transferred to ledger accounts. Books of original entry is nothing but an accounting book or journal where all transactions are initially recorded. All business transactions, their details and descriptions are first recorded in the book of original entry.
Entering transactions on a regular basis in Book of original entry that carries details and evidence of business transactions before they are posted or transferred into proper ledger because, without the book of original entry being filled with evidence of business transactions, the writing of a ledger cannot be initiated.
What is Profit Before Tax (PBT)? – Profit Before Tax Formula with Example