What is a journal entry in accounting?
A record of a financial transaction in accounting where every transaction is documented.
What is a source document?
Proof of a transaction.
What does HST stand for?
Harmonized Sales Tax.
What does GAAP stand for?
Generally Accepted Accounting Principles.
What must every journal entry include besides accounts and amounts?
Date and description of the transaction.
Name two things every journal entry must include.
Date of transaction, accounts involved, amounts debited/credited, or description.
Name two types of source documents.
Any of the two: Cash Sales Slip, Sales Invoice, Purchase Invoice, Cheque Copy, Cash Receipt, POS Summary, Bank Debit Advice, Bank Credit Advice.
Who collects HST Payable?
Businesses, on behalf of the government.
What is the objectivity principle?
Accountants must not make up or estimate transaction values (except for some non-cash transactions).
Name a source document used for bank transactions.
Bank Debit Advice or Bank Credit Advice.
True or False: Every transaction affects at least two accounts.
True.
Which source document shows a sale made for cash?
Cash Sales Slip.
What is HST Recoverable?
Tax a business pays on its purchases, which can be reclaimed.
Why is objectivity important?
It ensures financial statements are reliable and trustworthy.
Which account tracks HST collected from customers?
HST Payable.
Give an example of a journal entry description.
For example: "Paid rent with cheque."
What is the role of source documents in accounting?
They support revenue and expenses by providing proof of transactions.
Is HST Recoverable an expense?
No, because it can be reclaimed.
Give an example of a transaction where objectivity may not fully apply.
Amortization (where calculation backup is required instead).
How do source documents relate to the objectivity principle?
They provide objective proof for accounting entries.
What is the main purpose of a journal entry?
To keep a complete record of all financial transactions.
Why are source documents important for audits?
They serve as evidence to verify transactions.
How do HST Payable and HST Recoverable affect the final tax remittance?
HST Payable minus HST Recoverable = HST owed to the government.
Who relies on objective financial statements?
Investors, regulators, and other stakeholders.
What is the result of not following objectivity in accounting?
Financial statements may not be trusted or reliable.