Chap 2 Flashcards
Types of business transactions
Cash and credit transactions
What is a cash transaction?
When payment is made immediately after purchase
What is a credit transaction?
When payment is delayed after purchase have been made
Monetary theory
Only business transactions that can be measured in monetary terms are recorded
5 steps of the accounting information system
Source document - journal - ledger - trial balance - financial statement
Objectivity theory
Accounting information recorded must be supported by reliable and verifiable evidence so that financial statements will be free of bias.
Historical cost theory
Transactions should be recorded at their original cost
Undercharged
Debit note
Overcharged/returned
Credit note
On credit
Invoice
Cash purchase/cash
receipt
Cheque
Bank statement
