Accounting I Honors Chapter 3 Study Guide
31 Questions
100 Views

Accounting I Honors Chapter 3 Study Guide

Created by
@StatelyComposite

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is a form of recording transactions in chronological order?

journal

What is the term for recording transactions in a journal?

journalizing

What is the information for each transaction recorded in a journal called?

entry

What is the recording of debit and credit parts of a transaction called?

<p>double-entry accounting</p> Signup and view all the answers

What is a business paper form from which information is obtained for a journal entry?

<p>source document</p> Signup and view all the answers

What is a business form ordering a bank to pay cash from a bank account?

<p>check</p> Signup and view all the answers

What form describes the goods or services sold, the quantity, the price, and the terms of sale?

<p>invoice</p> Signup and view all the answers

What invoice is used as a source document for recording a sale on account?

<p>sales invoice</p> Signup and view all the answers

What is a business form giving written acknowledgment for cash received?

<p>receipt</p> Signup and view all the answers

What form contains a brief message to describe a transaction?

<p>memorandum</p> Signup and view all the answers

Information in a journal includes the debit and credit parts of each transaction recorded in one place.

<p>True</p> Signup and view all the answers

The Objective Evidence accounting concept requires that there be proof that a transaction did occur.

<p>True</p> Signup and view all the answers

Examples of source documents include checks, sales invoices, receipts, and memorandums.

<p>True</p> Signup and view all the answers

A memorandum is the source document used when items are paid in cash.

<p>False</p> Signup and view all the answers

A receipt is the source document for cash received from transactions other than sales.

<p>True</p> Signup and view all the answers

A calculator tape is the source document for daily cash sales.

<p>True</p> Signup and view all the answers

The accounts affected when cash is received from the owner as an investment are Cash and Sales.

<p>False</p> Signup and view all the answers

When cash is paid for supplies, the Cash account is debited.

<p>False</p> Signup and view all the answers

When cash is used to pay for insurance, the asset account Prepaid Insurance increases.

<p>True</p> Signup and view all the answers

The source document used when supplies are ordered by telephone on account is a memorandum.

<p>True</p> Signup and view all the answers

The source document used when supplies bought on account are paid for is a receipt.

<p>False</p> Signup and view all the answers

When cash is received from sales, both the Cash account and the Sales account are increased.

<p>True</p> Signup and view all the answers

The source document 'sales invoice' is abbreviated as S in a journal entry.

<p>True</p> Signup and view all the answers

When services are sold on account, an asset account and a liability account are affected.

<p>True</p> Signup and view all the answers

The accounts affected when paying cash for equipment rental are Equipment Rental Expense and Cash.

<p>True</p> Signup and view all the answers

When cash is received on account, one asset account increases and another asset account decreases.

<p>True</p> Signup and view all the answers

The accounts affected when paying cash to the owner for a withdrawal of equity are the capital account and Cash.

<p>False</p> Signup and view all the answers

If there is only one blank line remaining on a journal page, it is standard practice to split the entry and record the second line of the entry on the next page.

<p>False</p> Signup and view all the answers

To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place.

<p>False</p> Signup and view all the answers

If an error is detected in a journal entry after several additional journal entries have been made, the entry should be corrected by drawing a line through the incorrect parts and writing the correct parts on the same line above the error.

<p>True</p> Signup and view all the answers

Match the following accounts affected with their transactions:

<p>Received cash from owner, David Dumire, as an investment = Cash, David Dumire, Capital Paid cash for supplies = Supplies, Cash Paid cash for insurance = Prepaid Insurance, Cash Bought supplies on account from Casey Company = Supplies, Accounts Payable-Casey Company Paid cash on account to Casey Company = Accounts Payable-Casey Company, Cash Received cash from sales = Cash, Sales Sold services on account to T.Sundeen = Accounts Receivable-T.Sundeen, Sales Paid cash for advertising expense = Advertising Expense, Cash Received cash on account from T.Sundeen = Cash, Accounts Receivable-T.Sundeen Paid cash to owner, David Dumire, for a withdrawal of equity = David Dumire, Drawing, Cash</p> Signup and view all the answers

Study Notes

Journalizing Transactions

  • Journal: A record of transactions in chronological order, essential for organizing financial data.
  • Journalizing: The act of entering transaction details into a journal, ensuring accurate documentation.
  • Entry: Represents information for each transaction recorded in a journal, including date, accounts affected, and amounts.

Double-Entry Accounting

  • Double-entry accounting: A system that records both the debit and credit components of each transaction, promoting accuracy and balance in accounting records.

Source Documents

  • Source document: A business form used to gather information for journal entries, essential for supporting financial transactions.
  • Types of source documents include:
    • Check: Orders a bank to pay cash from an account.
    • Invoice: Detailed form documenting goods/services sold, including quantity and price.
    • Sales invoice: A specific invoice serving as a source document for sales on account.
    • Receipt: Written acknowledgment for cash received.
    • Memorandum: Brief message summarizing a transaction.

Accounting Principles

  • Objective Evidence concept: Stipulates that proof of a transaction is required; supported by proper documentation.
  • True statements regarding journals:
    • Includes both debit and credit information in one location.
    • Examples of source documents: checks, invoices, receipts, and memorandums.

Transactions and Accounts Affected

  • When cash is received from sales, both the Cash and Sales accounts increase.
  • Paying cash for supplies affects the Supplies and Cash accounts.
  • Receiving cash for services leads to changes in Cash and Accounts Receivable.
  • Various financial activities involve specific accounts, such as those for investment, withdrawals, and expenses.

Accounting Corrections

  • If one blank line remains on a journal page, the remaining entry should continue on the next page instead of splitting.
  • Errors in journal entries should not be erased. Instead, correct an error by drawing a line through the mistake and noting the correction above it.

Specific Account Transactions

  • Cases involving cash receipts or payments, investments, and withdrawals illustrate how different accounts interact:
    • Cash received from the owner as an investment increases Cash and Capital account.
    • Payment for supplies or services usually reduces Cash accounts while increasing respective asset accounts (e.g., Supplies, Prepaid Insurance).
    • Accounts Payable is affected when supplies are bought on credit, illustrating liabilities in transaction management.

Miscellaneous

  • Important true/false concepts:
    • Cash payment for equipment rental affects both Equipment Rental Expense and Cash accounts.
    • Incorrect journal entries should be corrected without erasing past errors.
    • Acknowledgment of cash received through receipts supports the necessity of accurate documentation in various transactions.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Description

This study guide consists of essential flashcards covering key concepts from Chapter 3 of Accounting I Honors. It focuses on the process of journalizing transactions, including definitions and examples pertinent to the recording of transactions. Perfect for revising and reinforcing your understanding of journal entries.

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser