Podcast
Questions and Answers
What is the correct accounting entry for a Debit Advice issued by a bank?
What is the correct accounting entry for a Debit Advice issued by a bank?
- Debit: Interest Expense, Credit: Bank (correct)
- Debit: Bank, Credit: Interest Expense
- Debit: Interest Earned, Credit: Bank
- Debit: Bank, Credit: Interest Earned
When journalizing a Cash Receipt from Accounts Receivable, which accounts are involved?
When journalizing a Cash Receipt from Accounts Receivable, which accounts are involved?
- Debit: Bank, Credit: Accounts Receivable (correct)
- Debit: Bank, Credit: Accounts Payable
- Debit: Accounts Receivable, Credit: Bank
- Debit: Accounts Payable, Credit: Bank
Which of the following source documents would NOT result in a debit to the Accounts Payable account?
Which of the following source documents would NOT result in a debit to the Accounts Payable account?
- Sales Invoice (correct)
- Bill Payment / Cheque Copy
- Purchase Invoice
- Bill Receipt
In terms of HST transactions, which statement is accurate when recording sales revenue?
In terms of HST transactions, which statement is accurate when recording sales revenue?
What is the consequence if the debits and credits in a transaction do not balance?
What is the consequence if the debits and credits in a transaction do not balance?
Flashcards
Debit Advice
Debit Advice
A bank document issued to inform you about a decrease in your account balance due to an expense, like interest charges. It shows the bank debiting your account (decreasing balance) and crediting itself (increasing its asset).
Credit Advice
Credit Advice
A bank document issued to inform you about an increase in your account balance due to interest earned. It shows the bank crediting your account (increasing balance) and debiting itself (decreasing its asset).
HST Payable
HST Payable
A liability account that tracks the Harmonized Sales Tax (HST) collected from customers on sales transactions. It represents the amount of HST that the business owes to the government.
HST Recoverable
HST Recoverable
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Journalizing Transactions with HST
Journalizing Transactions with HST
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Study Notes
Bank Advice
- Issued by banks for changes like interest.
- Debit Advice: Debit - Interest Expense, Credit - Bank
- Credit Advice: Debit - Bank, Credit - Interest Earned
Transactions
- Must be supported by documents for accuracy.
- All entries must balance (Debits = Credits).
Source Documents and Accounts
| Source Document | Debited Account | Credited Account |
|---|---|---|
| Cash Sales Slip (goods/services and cash) | Bank | HST Payable, Sales (something revenue) |
| Sales Invoice (sold goods/services on account) | Accounts Receivable | HST Payable, Sales (something revenue) |
| Point of Sale Summary (journalized as cash sales slip) | Bank | HST Payable, Sales (Sales revenue) |
| Purchase Invoice (purchased goods/services on account) | Asset or (Expense) HST Recoverable | Accounts Payable |
| Bill Receipt (received bill) | Expense HST Recoverable | Accounts Payable |
| Bill Payment/Cheque Copy (paid bill with cash) | Accounts Payable | Bank |
Bank Debit/Credit
- Debit (Decreasing): Memo/Advice notifying the bank decreased your account (usually for interest charges). Record the following entry.
- Credit (Increasing): Memo/Advice notifying the bank increased your account (usually for interest earned). Record the following entry.
HST/GST/PST
- Journalizing transactions with HST in the general journal.
- GST = Goods and services tax
- PST = Provincial sales tax
- HST = Combined 13%
- Transactions involving HST (Harmonized Sales Tax): account for the tax in the general journal. Track both the tax collected from customers (HST) and the tax the business owes.
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Description
This quiz covers essential concepts regarding bank advice, including debit and credit advice related to interest expenses and earnings. It also emphasizes the importance of supporting documents in transactions and maintaining accurate entries where debits equal credits. Test your knowledge about source documents and their corresponding accounts.
