In which book are transactions initially recorded?

The correct answer is the Book of Prime Entry. This book serves as the initial point of recording all business transactions before they are transferred to the relevant accounts in the ledger. Each transaction is documented in chronological order, allowing for accurate tracking and easier referencing.

Understanding the function of the Book of Prime Entry is essential for maintaining an orderly system of bookkeeping. It ensures that all transactions are accounted for, which is critical for producing reliable financial statements. The information recorded in this book is summarized and then posted to the general ledger, supporting effective financial management and reporting.

The other options represent different functions in the accounting system. For example, the Cash Book is a specific type of record focused solely on cash transactions, both receipts and payments, and does not encompass all transaction types. The General Record Book often refers to more comprehensive or detailed records that may incorporate various transactions but typically does not serve as the initial step in recording. The Book of Credit Entry would pertain specifically to accounts in credit transactions, which is only a subset of total transactions and does not serve the broader purpose of initial recording that the Book of Prime Entry fulfills.