Accounting reporting and documents Flashcards
Types of business documents
- Cash receipt
- Cheque butt
- Sales invoice
- Purchase invoice
- Memo
- Electronic funds transfer (EFT)
- Credit note
Assets
Present economic resource controlled by an entity (as a result of past events) that has the potential to provide future economic benefit
CA = Converted, sold, consumed within 12 months
NCA = Used by business, not held for resale
Liability
Present obligation of the entity (as a result of past events) to transfer an economic resource
CL = Settled within 12 months
NCL = Settled after 12 months
Owner’s equity
The residual interest in the assets of the entity after liabilities are deducted
Expense
Decrease in assets (or increase in liabilities) that reduces owners equity (except for drawings)
Revenue
An increase in assets (or decrease in liabilities) that leads to an increase in owner’s equity (except for a capital contribution)
General ledger
Place where transactions are recorded for individual accounts
Double entry accounting
Every transaction must affect at least two items in the accounting equation
General ledger rules
Assets, expenses = Increase on debits
Liabilities, OE, revenues = Increase on credits
GST clearing account
Both an asset and liability account depending on the amount of GST paid and collected
Paid > collected = asset
Collected > paid = liability
Recording inventory write-down
Inventory write-down (DR)
Inventory (CR)
Trial balance
A statement of all the credits and debits in a double entry accounting system, created in order to test that they are equal
Pre-adjustment trial balance
The preparation of a trial balance before balance day adjustments have been made
Purpose of pre-adjustment trial balance
- Determines if any errors have been made in the recording and posting of transactions into the general ledger
- Purpose is to correct any errors before balance day adjustments are made
How is the trial balance prepared?
Footing, balancing, closing each ledger account
