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17 Cards in this Set
- Front
- Back
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Explain shortly accounting as a system: |
Input : financial transactions take place Process : financial transactions and events are recorded; classified and summarised Output: reports are made from the findings; evaluating and comparing takes placew |
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Why are transactions recorded on source documents? |
It provides proof to both parties related to the financial transaction. |
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What does source documents identify from the transactions? |
-source documents identifies what type of transaction took place; the parties involved; the date of the transaction and the description of goods and services |
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Where does the info in sources documents get recorded in? |
General ledger |
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On what side do assets increase? |
Debit |
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On what side do assets decrease? |
-credit |
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On what side does equity, capital and income increase? |
Credit |
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On what side do equity, capital and income decrease? |
Debit |
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On what side does expenses, drawings increase and decrease? |
Increase on debit; decrease on credit |
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What is the book of prime or first entry in accounting? |
The general journal |
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Name an important characteristic of the general ledger: |
-each asset, liability; income and expense will have its own account in the General Ledger |
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What does the general journal do? |
Book of prime entry -provides an instruction to the bookkeeper what accounts to Dr and Cr in the general ledger |
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What does the general journal do? |
Book of prime entry -provides an instruction to the bookkeeper what accounts to Dr and Cr in the general ledger |
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Define general ledger |
-is a formal summarised record of transactions and adjustments of a business entity in respect of a particular item or category of items |
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What do you do after completing General Ledger? And how? |
You must check the accuracy of the debit and credit posting to the general ledger -you do this by preparing a trial balance |
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What is a trail balance? |
-list of account titles; codes; balances; and totals contained in the general ledger at a given point in time (usually end of each calender month or end of financial period of year) |
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What do you use to prepare annual financial statements? |
Summarised general ledger which is the trial balance to prepare the SOCI and SOFP |
