Unit 2: Chapters 6 & 7 Flashcards
(21 cards)
accounting cycle
activities performed in an accounting period that help the business keep its records in an orderly fashion
source document
a paper prepared as the evidence that a transaction occurred
invoice
lists the quantity, description, unit price, and total cost of items sold and shipped to a buyer (source document)
receipt
serves as a record of cash received (source document)
memorandum (memo)
a brief written message that describes a transaction that takes place within a business (source document)
check stub
list the same info that appears on a check and shows the balance in the checking account before and after each check is written (source document)
journal
a chronological record of the transactions of a business
journalizing
the process of recording business transactions
fiscal year
an accounting period of 12 months
calendar year
an accounting period that begins on Jan 1. and ends on Dec. 1
general journal
an all-purpose journal in which all the transactions of a business may be recorded
posting
the process of transferring information from the journal to individual general ledger accounts
general ledger
a permanent record organized by account number
ledger account form
accounting stationery used to record financial information about specific accounts
proving the ledger
adding all debit balances and all credit balances of ledger accounts, then comparing two totals to see whether they are equal
trial balance
a list of all the general ledger account names and balances; prepared to prove the ledger
transposition error
two digits within an amount are accidentally reversed
slide error
decimal point is moved by mistake
correcting entry
an entry made to correct an error in a journal entry discovered after posting
Setting Up Journal
Debit
Credit
Source document
Steps
- collect & verify source document
2.analyze each transactions - journalize each transaction
4.post to ledger
5.trail balance
