Chapter 2: Accounting Information System

Question 1

State the difference between a credit transaction and cash transaction.

Answer 1

A cash transaction occurs when payment is made at the same time or immediately during a cash sale or cash purchase while a credit transaction occurs when payment is delayed or postponed during a credit sale or credit purchase.

Question 2

State the flow of accounting information system

Answer 2

Source documents -> Journal -> Ledgers -> Trial balance -> Financial Reports

Question 3

What is the purpose of source documents?

Answer 3

Ensures that all business transactions are recorded by reliable and verifiable information.

Question 4

State the use of invoice

Answer 4

Informs credit customers of the amount owed after the business sold goods or provided services on credit

Question 5

State the use of credit note

Answer 5

supports goods returned

Question 6

State the use of payment voucher

Answer 6

Process payment to credit suppliers
- Must be approved by authorized personnel
- Must be supported by original supplier’s invoice

Question 7

State the use of receipts

Answer 7

Acknowledge payment received from customers immediately after goods were sold or services were provided.

Question 8

State the use of bank statement

Answer 8

Check and tally against the business records of its cash at bank account. To support dishonoured cheque and bank charges.