Vocabulary
A sequence of business activities completed throughout a fiscal period to keep accounting records in an orderly fashion is the _______.
Accounting cycle
What is the first step in the Accounting Cycle?
Collect source documents and verify the financial information.
When recording a business transaction, the amount is always entered first because it is the most important part of the journal entry... True or False?
False
Wrote a check for $500 to pay the monthly rent. Name the accounts and whether they are increased or decreased.
Rent expense - increased
Cash in Bank - decreased
Name a most commonly used source document to record transactions for a business.
Invoice, Receipt, Check stub, Memorandum
An all-purpose journal in which all transactions of a business may be recorded is the _____.
General journal
What is the 3rd step in the Accounting Cycle?
Record the debit and credit parts of each business transaction in a journal.
A check was written on April 15. It is being recorded today, April 17. What date is used for recording the transaction?
April 15
Deb Tozer transferred shop equipment valued at $350 into the business. What are the accounts effected and are they increased or decreased.
Shop Equipment - increase
Deb Tozer, Capital - increase
What is the name of the source document listing specific information about a business transaction that involves the buying and selling of goods?
Invoice
The process of recording business transactions in a journal is called _____.
Journalizing
What is the 4th step in the Accounting Cycle?
Post each journal entry to the ledger accounts.
The credit part of a business transaction should be indented from the left edge of the paper. True or False?
True
Received $50 for services rendered. What are the accounts effected and are they increased or decreased.
Cash in Bank - increased
Fees - increased
When a manual or computerized accounting system is used, the analysis of a business transaction into its debit and credit parts is required for both. True or False?
True
A business paper that verifies that a transaction actually occurred is a(n) _____.
Source document
What is the 7th step in the Accounting Cycle?
Prepare the financial statements.
If an error is discovered before posting occurs, what should you do to correct the entry?
Draw a line through the incorrect item and write the correct item above it.
Issued Check 203 for $75 to Town News to apply on the account. Name the accounts effected and whether they are increased or decreased.
Accts. Payable - Town News / decreased
Cash in Bank / decreased
When account names are classified, what are the five classification types used?
Assets, Liability, Owners Equity, Revenue and Expense.
The source document for recording a cash payment transaction is a(n) _____.
Check stub
What is the last step in the Accounting Cycle?
Prepare a post-closing trial balance.
Business transactions are recorded in _____ order.
Chronological
Purchased $150 in beauty supplies on account from A Touch of Class. Name the accounts and whether they are increased of decreased.
Beauty Supplies - increased
Accts. Payable - A Touch of Class - increased
An accounting period may be for any designated length of time, such as a month, a quarter, or a year. Most businesses use a year as their accounting period. If the accounting period for a business begins on January 1 and ends on December 31, it is called a _____ _____. A ____ _____ is an accounting period of twelve months, for example a school from July 1 to June 30.
Calendar year
Fiscal year