Accounting 6

Question 1

Journal

Answer 1

a book in which the accounting entries for all transactions are first recorded before they are recorded in the ledger accounts
-a.k.a “Book of original entry” because each balanced entry is recorded there first.

Question 2

Journal Entry

Answer 2

an entry in the journal

Question 3

Journalizing

Answer 3

the process of recording transactions in a journal

Question 4

Usefulness of general journal

Answer 4

-to provide a continous record of the accounting entries in chronological order
-useful for reference, making sure everything is verified.

Question 5

Opening Entry

Answer 5

A journal entry that starts the book off.

Question 6

Source Document

Answer 6

Business papers that show the nature of transaction and provides all the information needed to account for it properly
-used to record transaction and to input an entry

Question 7

Cash sales slip

Answer 7

A business form showing the details of which goods and services are bought with cash

Debit: Bank
Credit: Revenue
(same with POS)

Question 8

Sales invoice

Answer 8

A business form showing details of a transaction in which goods or services are sold on account

Debit: Account receivable
Credit: revenue

Question 9

Purchase invoice

Answer 9

A business form showing details of a transaction in which goods or services are purchased on account

Debit: expense account/asset account
Credit: Account payable

Question 10

(POS terminal)

Answer 10

The computerized sales register that allows a business and its customers to exchange funds digitally

Question 11

POS Card summary

Answer 11

Provides sales information for a particular day

Question 12

Transaction log

Answer 12

A document generated by a POS terminal that contains detailed information about each transaction

Question 13

Cheque copy

Answer 13

Supporting the accounting entry for a payment by cheque such as:
1. paying an account payable
2. cash purchase of an assset
3. Cash payment for an expense
4. drawings

-cheque copy will not be sufficient details if it is an on-the-spot cash payment. A bill/receipt will be required ontop if so.
-drawing cheques are sufficient when signed by the owner

Debit: liability account/Asset account/Expense account/Drawings account
Credit: bank

Question 14

Cash receipt daily summary

Answer 14

A business paper that lists the money coming in from customers

debit: bank
credit: account recievable

Question 15

Remittance advice

Answer 15

A form accompanying the cheque explaining the payment.
-sometimes it’s just a copy

Question 16

Bank debit advice

Answer 16

A bank document informing the business of a decrease made in the business’s bank account

Debit: interest or other account
Credit: Bank

Question 17

Bank credit advice

Answer 17

A bank document informing the business of an increase made in the business’s bank account

Debit: bank
Credit: interest earned or other account

Question 18

Vendor

Answer 18

a business selling a good or service

Question 19

purchaser

Answer 19

the buying of a good or service

Question 20

The key advantages for HST is…

Answer 20

1. Simplified paperwork – there is only one tax system rather than two
2. Increased refunds – business are eligible to get a refund on the HST that has been spent on business-related expenses. Since the HST is 13% and the GST is only 5%, businesses are eligible for more refunds.

Question 21

The key advantages for the federal and provincial governments is:

Answer 21

1. More tax revenue - the HST is collected on a wider range of goods and services than the former PST, so more tax revenue is collected
2. Less administration – the former GST and HST are collected together, so only one tax administration agency is needed

Question 22

HST recoverable

Answer 22

tax that can be recovered when an item is bought for the business (only applicable to HST not PST)

Question 23

HST payable

Answer 23

money that you need to remit to the government after 1 month
-combine GST and PST to get HST payable

Question 24

Remittance/refund equation

Answer 24

HST payable - HST recoverable = remittance/refund amount

Question 25

Contra account

Answer 25

an account that has a balance that reduces or offsets the balance of a closely related amount.

Question 26

GST %

Answer 26

5% (goods and service tax) (federal)

Question 27

PST %

Answer 27

8% (provincial sales tax)(provincial)

Question 28

Sales tax

Answer 28

tax generated from business transactions

Question 29

4 principles of sales tax:

Answer 29

1. Tax dollars are charged to the buyer of goods and services. If the purchaser is a business, they must keep track of the HST in another account
   2 The tax dollars are collected by the seller and recorded in a separate liability
2. The tax dollars rightfully belong to the government
3. The seller sends the tax dollars to the government at appointed times. unless previously paid.

Question 30

CRA

Answer 30

canada revenue agency

Question 31

who is required to register to GST/HST?

Answer 31

any business of sales of taxable services or goods of over 30.000
-small businesses may report annually

Question 32

Input tax credit

Answer 32

another word for HSTrecoverables

Question 33

value added tax

Answer 33

indirect tax that is applied to the sale of goods and services at each stage of the production