Unit 2 & 3 Review Q’s Flashcards
What is a source document?
A business paper that is the original record of a transaction and provides the info needed when accounting for transactions
Purpose of source documents.
Provides proof that a transaction occurred, kept on file for reference
Which GAAP principle do source documents satisfy?
The Objectivity Principle → requires a business’s accounting to be recorded based on clear, verifiable evidence
What does Capital record?
1) Investments by the owner
2) A loss of assets
What is debit & credit theory based on?
The Double Entry System of Accounting (means at least 2 accounts are affected by a transaction and that DR = CR)
What is the General Journal, and what is it also referred to as?
Book in which the accounting entries for transactions are FIRST recorded
Also referred to as the Book of Original Entry
What is a Cash Sales Slip?
Records a transaction when a company sells goods/services for cash & purchases goods/services with cash
What is a Sales Invoice and a Purchase Invoice?
Sales Invoice: When a company sells goods/services on credit
Purchase Invoice: When a company purchases goods/services on credit
An invoice has a section called “Terms.” What is it?
Tells the buyer when payment is due, if there is a discount for early payment or if interest will be charged for late payment
If the bill is not paid in time, the seller may…
- Only accept cash payments for future purchases
- Apply an interest charge
What is a cheque?
A document used instead of money to make a payment from a bank account (treated like cash)
Company ISSUES cheque to pay a bill / salaries
Company RECEIVES cheque after customer paid on account
What is a bank credit memo?
Deposits money into a company’s bank account
What is one reason the bank may deposit money into a company’s bank account?
Because it’s paying interest to the company after borrowing the company’s money
What is a bank debit memo?
Withdraws money to a company’s bank account
What is one reason the bank may withdraw money from a company’s bank account?
Bank interest was charged on a loan given to the company
