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Types of information in a business transaction : asset, liability, sales, revenue, expense, date

How often should the transaction be record? everyday


How might a business have evidence that a transaction took place and is correct?
- Look at the balance sheet whether two sides are equal.
- Bill (invoice)
- recept
Which record is better? Why?
Record in Chronological record by time and ​date
Double-entry accounting : at least one debit/ credit
Accuracy : mistakes are easily spotted

Journals and journalizing


- A accounting form that records transactions in chronological order is called a ​journal
- Recording transaction in a journal is called ​journalizing
- Information for each transaction recorded in a journal is called an ​entry
- The recording of debit and credit parts of a transaction is called ​double-entry
account
Source Document
- A business paper from which information is obtained for a journal entry.
A sources document is used to
- evidence that the transaction took place.
- Confirm that the transaction details are correct.
Checks/Cheques
- A business form ordering a bank to pay cash from a bank account.
Invoice(pay immediately/ in cash)
- A business form describing the goods or services sold the quantity, the price, and the
terms of sale.
Sales Invoice(on account)
- An invoice used as a source document for recording a sales on account.
- A sales invoice is also reference to as a sales ticket or sales slip.
Report
- A business form giving written acknowledgement for cash recieved.
Memorandums
- A business form on which a brief message is written to describe a transaction.
Calculator tape
- A business form recording daily cash sales transactions. It is used in smaller
business.
Receipt

Objective Document Concept


- A transaction should only be journalized if it has actually occurred.
- The amounts recorded must be accurate and true
What type of information is included on the source document?
- Price
- Invoice number
- Name of company
- Date
- Transaction number
- description
- address
Prenumbered Documents
- Form number printed on. (ie. personal check)
- Ensure that all documents are recorded
Batch Total
- accounting way that the document are right
- documents are totaled in two separate counts and the totals are compared. This
confirms accuracy and completeness.
- ie. total of invoices in numerical order
- jornalized and total all entries
- compare the two totals

When is a general journal page complete?


- When there is insufficient space to record any more entries.
- At the end of fiscal period(month)
Ending a journal page due to insufficient space
➔ Never use the last line on a jouranl page to record an entry.
◆ Rule a ​single line​ directly under last debit and credit columns
◆ Other next line write
● the ​date ​of last entry
● Carried Forward​ in the Account Title Column
● Place a ​check mark​ in the Post. Ref. column
◆ Write the ​column totals ​below the single line.
◆ Rule ​double lines ​below the column totals.
➔ Never split an entry over two Journal pages = may leave two lines
Start a new journal page
➔ A new journal page is started by writing the page number in the space provided in the
journal heading.
➔ Then we bring forward the debit and credit totals from the previous page.
◆ This means we never have to total more than one page
➔ On the first line write
◆ the ​date​ when the amounts were brought forward
◆ Broungt forward​ in the Account Title coulmn
◆ Place a ​check mark​ in the Post. Ref. column
➔ Write the ​brought forward totals ​in the debit and credit column
Ending a journal page at the end of the month
➔ At the end of the fiscal period we follow the steps for ending a journal except
◆ write ​Totals ​Ending a journal in the Account Title column
◆ no check mark is needed
➔ Single line
➔ date : of the last day of the month
➔ Totals
➔ Column totals
➔ double lines

Drew neat lines through all parts of the incorrect entry


Otherwise, cancel the error by neatly drawing a line through the incorrect item and write the
correct item immediately above the canceled item

STANDARD ACCOUNTING PRACTICES


Words in accounting records are written in full whem space permits.
- Words may be abbreviated only when space is limited
- All items must be written legibly
Dollars cents signs and decimal points are not used when writing amounts on ruled
accounting paper.
- Sometimes a color tint or a heavy vertical rule is used on printed accounting paper to
separate the dollars and cents columns.
Two zeros are written in the cents column when an amount is in even dollars, such as
$500.00
- If the cents is left blank, doubts may arise later about the correct amount.
A single line is ruled across amount coulumns to indicate a calculation such as addition.
A double line is ruled across amount columns to indicate that the amounts are totals.
- In a journal the double rules also indicate that the ​debit totals equal the credit
totals​.
Neatness is very important in accounting records so that there is never any doubt about
what information has been recorded.
- A rules is used to make single and double lines

Cash is received from sales, what abbreviation is used for the sources of document?
T(calculator tape)

why are the sources of document entries for calculator tape ‘T’ not in number order?
By date

What is GAAP? example?


- The standards and rules that accountant follow while recording and reporting
financial activities. “Generally Accepted Accounting Principles”. (ie. Unit of
measurement, single line, double lines)

what is the unit measurement concept? Business activities are stated in numbers that have
common values. The financial reports of business can be clearly stated and understood in
numbers that have comparable number. (ie. currency)

What is the business entity concept?


Applied when a business’s financial information is recorded and reported separately from the
owner’s personal financial information.