Chapter 4 - Cash Transactions

Question 1

What source document verifies a transaction involving GST?

Answer 1

Tax Invoice, that would be a part of another source document (i.e. cash receipt)

Question 2

What are 4 components required to be called a tax invoice and substantiate a GST transaction

Answer 2

1. The words ‘Tax Invoice’
2. The name of the Seller
3. The Australian Business Number (ABN) of the seller.
4. The date of the transaction

Question 3

What increase and decreases GST

Answer 3

GST on sales creates a liability (increase), while GST on purchases decreases the liability.

Question 4

General Journal Definition

Answer 4

An Accounting record used to analyse and record each transaction, and to identify its source document before posting to the General Ledger

Question 5

What source document is used to verify cash recieved?

Answer 5

Cash Receipt

Question 6

What are the General Journal Entries to record a Cash/Credit Sales

Answer 6

Bank/AR DR
Sales CR
GST Clearing CR
Cost Of Sales DR
Inventory CR

Question 7

Which source document CAN be used to verify a cash payment made by cheque?

Answer 7

Cheque Butt

Question 8

What are the entries to record a cash payment for Inventory

Answer 8

Inventory DR
GST Clearing DR
Bank CR

Question 9

What are the entries involved in a GST settlement and GST refund

Answer 9

GST settlement, bank decrease (CR), GST clearing decreased (DR). Opposite for refund BANK increases (DR), GST clearing (CR)