AFM 191 - Chp 2.1 - source documents + capturing transactions

Question 1

what’s phrase “cradle to grave” in context of accounting

Answer 1

refers to the process that starts with the source documents and usually ends with either giving or receiving a cash payment depending on the transaction

Question 1

Define a transaction in accounting

Answer 1

an exchange between people, business, or a combination of the two that can be measured in financial terms.

Question 2

define a business to consumer transaction (B2C)

Answer 2

business sells to a consumer

Question 3

define a business to business (B2B) transaction

Answer 3

where business sells to another business - we typically start to deal with source documents

Question 4

define a source document

Answer 4

captures key critical details of a business transaction

Question 5

define an invoice

Answer 5

type of source document that represents a request for payment

Question 6

Define an accounting information system (AIS)

Answer 6

collects, stores, and processes financial and accounting data that is then used for reporting and decision making

Question 7

Define a journal entry

Answer 7

a record of a transaction of accounting event + building blocks within AIS