Chapter 2 - source documents Flashcards
Definition of objectivity theory
Accounting information recorded must be supported by reliable and verifiable evidence so that financial statements will be free from opinions and biases.
Definition of historical cost theory
Transactions should be recorded at their original cost.
what are the seven types of source documents.
-receipt
-remittance
-payment voucher
-bank statement
-invoice
-credit note
-debit note
definition of receipt
acknowledges payment received from customers immediately after the business has sold goods or provided services
definition of remittance
informs credit supplier that payment by cheque has been made for a specific invoice
definition of payment voucher
processes payment to credit supplies which must approved by authorised personnel and must be supported by original supplier’s invoice
definition of bank statement
checks and tallies against the business records of its cash at bank account
definition of invoice
informs credit customers of the amount owed after the business sold goods or provided services on credit.
definition of credit note
reduces the amount owed by credit customers, who were previously overcharged or after goods were returned.
definition of debit note
increases the amount owed by credit customers who were previously undercharged
what source document when -When received money/cheque or when paid money/cheque
receipt
what source document when - Makes cheques payments
Remittance
what source document when - Makes cheques payments (kept by business)
payment voucher
what source document when - cheques deposits or cheques payments
bank statement
what source document when - Buys on credit or Sells on credit
Invoice
