Bookkeeping vs Accounting Flashcards
What is the first step in bookkeeping?
Data is recorded
This involves capturing transactional information.
What is the second step in bookkeeping?
Data is classified
This step organizes the recorded data into categories.
What is the third step in bookkeeping?
Data is summarized
This step condenses the classified data into a more digestible format.
What is the fourth step in bookkeeping?
Data is verified
This ensures the accuracy and completeness of the recorded information.
What is the primary purpose of accounting?
To draft reports called financial statements
These statements provide insights into the financial status of a business.
How are financial statements used?
For meaningful decision making for business
They help stakeholders understand the financial implications of their decisions.
What is a transaction?
Any business action/opportunity where money is involved
This includes the exchange of goods/services for payment.
What occurs when goods/services have been delivered by the company?
The customer pays money to the business
This completes the transaction process.
What is a Source Document?
A document completed to record the exchange of money & goods/services
It provides evidence of the transaction.
Fill in the blank: The first step in bookkeeping is _______.
Data is recorded
Fill in the blank: The information in accounting is _______ to draft financial statements.
transferred
True or False: The financial statements are not useful for decision making.
False
Financial statements are crucial for informed business decisions.
What are the key steps in bookkeeping?
- Data is recorded
- Data is classified
- Data is summarized
- Data is verified
What does the accounting process involve after data is transferred?
- Data is analyzed
- Data is interpreted
These steps help in understanding the financial data.
