Transactions & Source Documents
This is the first step in the accounting cycle where business activities are analyzed
Analyzing transactions
This is the book where transactions are first recorded
General journal
This is where journal entries are transferred after recording
Ledger
This is a list of all accounts and their balances
Trial balance
What entries are made at the end of a period?
Adjusting Entries
These are physical proofs of transactions like receipts and invoices
Source documents
This must always balance in a journal entry
Debits and credits
This shows all transactions for one account
This must be equal for the trial balance to be correct
Total Debits and Total Credits
Supplies used but not recorded is an example of what?
Supplies expense
Buying supplies with cash is an example of this type of activity
A business transaction
This side increases assets
Debit side
The left side of a ledger account is called this
Debit Side
Does a balanced trial balance mean no errors? (Explain)
No, some errors can still exist even if it balances
What type of adjustment involves time, like rent or insurance?
Prepaid expenses
What document shows money owed to a business?
Purchae Invoice
This is written to explain a journal entry
Description
Why is posting important?
It organizes accounts and tracks balances
This is prepared after posting
Trial balance
Why are adjusting entries necessary?
To ensure financial statements are accurate
Why are source documents important?
They provide proof and ensure accurate recording
What happens if debits and credits don’t match?
The entry is incorrect and must be corrected
What would happen if posting was skipped?
Account balances would be incorrect or incomplete
What is the main purpose of the trial balance?
To check the accuracy of ledger balances
What happens if adjustments are not made?
Financial statements will be incorrect or misleading