Ch 6/7 Flashcards
(29 cards)
What is a contra account?
It is the account that has a balance that reduces/offsets the balance of a closely related account.
ex. accumulated depreciation
Types of Sales Tax (tax dollars generated from business transactions)
RST (retail sales tax) aka PST (provincial sales tax). It’s charged by gov. This simply increases the total cost of the goods purchased (aka increased price). PST in ontario is 8%
GST (Goods and Services Tax) type of value added tax 5%. Charged by fed gov.
HST (harmonized sales tax) type of value added tax of the two combined 13%
Cash receipts daily summary is…
A business paper that lists the money coming in from the customers
Dr bank
Cr A/R
Cash receipt daily summary
Bank advice or memo is…
A bank document informing the increase or decrease made in the business bank account
Dr interest expense
Cr bank
Bank debit advice
Cash sales Slip…
A business form of goods/services are sold to customer for cash. (there is usually a original and copy)
Dr Cash
Cr sales
Cash sales slip
Journal is also known as?
Book of original entry
Business transactions are journalised in…
Chronological order
Journalising is…
process of recording a transaction in a journal
Journal is…
a accounting book where all business transactions are first recorded
When writing accounts to be credited, what is the indent amount?
2.5 cm or thumb print in particulars column
- Opening entry def’
- This will include what? w
- What is the purpose?
- the first journal entry for a new business.
- The entry will only incude assets, liabilities, and owner’s equity. NO REVENUE OR EXPENSES.
- This helps set up the financial position.
Double-Entry accounting
for every journal entry, the debit side equal credit in amounts
Compound entry
a journal entry that involves more than two business accounts
What are the advantages to the journal?
- the complete transaction is recorded in one place
- Reduces errors
- represent chronological history
Balance column account has ___ money columns. What are they?
three
debit, credit and balance
Purpose of a journal is to…
provide a continous record of the accounting entries in which they occcur
Source document & supports what principle/concept
it shows the nature of transaction and provides info to properly account for it.
- Supports objectivity principle.
Cash receipt def’ & journal entry
cheques or cash received from customer on account ON ACCOUNT.
Dr Cash
Cr A/R
Purchase invoice def’ & journal entry
purchase on account.
Dr Asset or expense
Cr A/P
Posting
the transfer of information from journal to the ledger.
Cross Referencing
the recording of the JOURNAL PAGE NUMBER in the ledger account and the recording of the number in the journal.
forwarding
the process of continuing an account to a new account form by carrying the date and balance
When an error found immediately, you….
when found after a while you…
cross it out neatly and write the correct numbers on the side
write a correcting entry
Transposition error
changing the order of digits
