Accounting 1
A form for recording transactions in chronological order is called a
Journal
How often should businesses record journal transactions?
Daily
What is double entry accounting?
The recording of two-fold effects through the debit and credit parts of a transaction.
A business document from which information is obtained for a journal entry is called
a Source Document
A business form ordering a bank to pay cash from a bank account online
a Electronic Fund Transfer (EFT)
A document describing the goods or services sold on credit, the quantity, the price, and the terms of the sale is called an
Invoice
A business document giving written acknowledgement for cash received is called a
Receipt
A document on which a brief message is written to describe a transaction is called a
Memorandum (Memo)
When cash is paid for insurance, what accounts are debited and credited?
Prepaid Insurance DR
Cash at bank CR
When supplies are bought on credit, what account is credited?
Accounts Payable
When supplies are bought on credit, what account is debited?
Inventory
When cash is collected from credit customers, what account is reduced?
Accounts receivables
When cash is received from sales, which account is listed on the first line of the entry? Debit...
Cash at bank DR
When cash is received from sales, which account is listed on the second line of the journal entry?
Sales
When services are sold on account, which account is listed on the second line of the entry?
Sales
When cash is paid for any reason, what abbreviation is used for the source document?
C (for check)
When cash is received on account, what abbreviation is used for the source document?
R (for receipt)
In what order are transactions recorded in a journal?
By date
Why are source documents important?
Source documents are one way to verify the accuracy of a specific journal entry written for the original transaction.
On which line of a journal entry do you indent the account title?
The second line, the credit line
List the four parts of a journal entry
Date, Debit, Credit, narration using a Source Document
When hand written, journal entries should be recorded using
ink
When cash is withdrawn from an owner, what accounts are debited and credited?
Drawings DR
Cash at bank CR
When cash rent is paid for a rental equipment, what accounts are debited and credited?
Rental Expense DR
Cash at bank CR
When cash is received from an owner as an investment in the company, what account is debited and credited?
Cash at bank DR
Capital CR