What are books of prime entry used for?

Books of prime entry serve as the initial point for recording financial transactions within an accounting system. They are crucial for compiling and organizing transactions before they are transferred to the general ledger or other accounting records. This process involves entering data from source documents—such as invoices, receipts, and bank statements—into these books, which then categorize the transactions according to type (e.g., sales, purchases, cash transactions).

Using books of prime entry allows businesses to maintain a systematic approach to their accounting practices. It enhances accuracy by capturing all financial transactions in a structured manner, ensuring that nothing is overlooked when preparing financial statements. Thus, the correct choice emphasizes that these books are specifically filled with transactions derived from prime documents, functioning as a foundational tool in accounting procedures.