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Questions and Answers
What is a Check?
What is double-entry accounting?
The recording of debit and credit parts of a transaction.
What is an entry in accounting?
Information for each transaction recorded in a journal.
What is a general amount column?
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What is an invoice?
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What is a journal?
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What does journalizing mean?
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What is a memorandum?
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What does proving cash mean?
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What is a receipt?
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What is a sales invoice?
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What is a source document?
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What is a special amount column?
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Information in a journal includes the debit and credit parts of each transaction recorded in one place.
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The objective evidence accounting concept requires that there be proof that a transaction did occur.
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Examples of source documents include checks, sales invoices, memorandum, and letters.
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A check is the source document used when items are paid in cash.
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The source document for all cash payments is a sales invoice.
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A receipt is the source document for cash received from transactions other than sales.
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A calculator tape is the source document for daily sales.
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The source document used when supplies are bought on account is a memorandum.
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The source document used when supplies bought on account are paid for is a check.
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The journal columns used to record receiving cash from sales are cash debit and sales credit.
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The source document sales invoice is abbreviated as SI in a journal entry.
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The journal columns used to record paying cash for rent are general debit and cash credit.
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The journal columns used to record paying cash to the owner for personal use are general debit and cash credit.
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To prove a journal page, the total debit amounts are compared with the total credit amounts to be sure they are equal.
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Double lines across column totals mean that the totals have been verified as correct.
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To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place.
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Dollars and cents signs and decimal points should be used when writing amounts on ruled accounting pages.
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Study Notes
Essential Accounting Terms
- Check: A document that instructs a bank to pay cash from a specific account.
- Double-entry accounting: An accounting approach where each transaction includes both debit and credit recorded parts.
- Entry: Detailed information of a transaction that's systematically logged in a journal.
- General amount column: A column in a journal not designated with an account title.
Transaction Documentation
- Invoice: A form that details the sold goods or services, including their quantities and prices.
- Journal: A chronological record of transactions.
- Journalizing: The process of documenting transactions in a journal.
- Memorandum: A brief written document that outlines a transaction.
Cash Management
- Proving cash: The process of verifying that actual cash matches the recorded figures in accounting documents.
- Receipt: A business document that acknowledges cash received for a transaction.
Source Documents
- Sales invoice: A document that serves as a source for recording sales made on credit.
- Source document: Any original business paper used to gather information for a journal entry.
Journal Structure
- Special amount column: A journal column that has a specific account title.
Accounting Concepts
- Objective evidence concept: Mandates the existence of verifiable proof of transactions.
- Verification of journal pages: Involves comparing total debits and credits to ensure they match; indicated by double lines across totals.
Corrections and Notations
- Error correction in journal: The action of erasing an incorrect entry and replacing it with the correct information is not the accepted practice.
- Use of symbols in accounting: Standard practice requires avoiding dollar signs and decimal points when writing amounts on ruled accounting pages.
Source Document Examples
- Cash payment documentation: A check serves as a source document for cash payments.
- Payments for supplies: A memorandum is used when supplies are bought on account; a check is used for payment of such purchases.
- Daily sales tracking: A calculator tape functions as a source document for recording daily sales activity.
Journal Entry Truths
- Correct comparison of debits and credits: Validates that total debit entries equal total credit entries.
- Sales invoice abbreviation: The common abbreviation for sales invoice in journal entries is not "SI".
Transaction Types
- Cash sales: Recorded in the journal as cash debits and sales credits.
- Rent payment entries: Logged as general debits and cash credits in the accounting journal.
- Owner withdrawals: Documented in the journal with general debits and cash credits reflecting personal withdrawals.
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Description
Study essential terms and concepts from Chapter 3 of Accounting. This quiz covers important definitions such as 'check', 'double-entry accounting', and 'journal entries'. Perfect for reinforcing your knowledge before exams.
