Chapter 3: Recording Transactions Flashcards
HMany types of transactions? Listed?
3 types: Inter, Exter, Non-trans events
Exter trans?
Trans w outside parties
Give & receive sth in return
Ex: purchase, borrow $, provide & receive services
Intern trans?
not involve exter trans
affect entity’s asse, liabilities, equity
non-trans event?
not an exchg of goods & services transformation of eco resourses Ex: receive order from cust sign a contract to purchase sth hiring change InRate
Purposes of source docu?
2 purposes
- written evidence to support entries in acc records
- to control an entity’s resources
ABN?
Aus Biz Num
ATO
Aus Taxation Office
What’s trans?
trans = eco events recorded in acc sys
interim statements?
statements prepared for exter users b4 end of annual period
Acc cycle steps?
Steps in cycle: 1. Recog & record trans 2. Prepare fin statements -> start new period Acc records Source doc ---> fin statements
where are trans recored?
ledger accounts
general ledger?
place all accounts are maintained
HMany parts per account?
3 prts:
- title
- place for recording incre
- place for recording decre
Left-hand side of T-account is….
Debit = Dr
Right-hand side of T-account is
Credit = Cr
acc balance?
= Diff btw Sum Dr & Sum Cr
Sum Dr > Sum Cr
Debit balance
Sum Dr
Credit balance
Sum Dr = Sum Cr
zero balance
cash is received -> cash acc Dr/Cr?
Cash acc Dr
Liab acc Cr
cash is paid -> cash acc Dr/Cr
Cash acc Cr
Liab acc Dr
increase asset
Dr Asset acc
increase liabi
Cr Liab acc
increase owner’s equity
Cr owner’s equity
increase REV
Cr REV
increase expenses
Dr Expense
what includes in asset accounts?
cash, account receivable, other receivable or debtors, prepaid expenses, land, buildings, plant and equipment
what’s in liabilities accounts?
A/P, unearned income, other current liabilities, GST payable and receivable, mortgage payable
2 separate account in equity
cash
drawings or withdrawals
equity equation:
= investment by owner - Drawing by the owner + income - expense
A/R?
= trade debtors = amount that customers owed an entity
prepaid expense
Ex: prepaid insurance, prepaid rent
plant n equipment
physical items used in the entity for a relatively long period of time
asset increase –>
Dr Asset
Cr Asset
asset decrease
normal balance of asst?
Dr asset
liab decre?
Dr liab
liabi incre?
Cr liab
normal balance of liab
Cr Liab
equity decre
Dr Equity
equity incre
Cr Equity
normal balance of equity
Cr Equity
incm incre?
Cr Incm
incm decre?
Dr Incm
normal balance of incm?
Cr Incm
Expense incre?
Dr expense
Expense decre?
Cr expense
expense account will go to…..?
Dr Equity (b/c it decreases equity)
income account will go to….?
Cr Equity (b/c ít increases equity)
