Chapter 5&6 - Source Documents and Cash Accounting

Question 1

GST

Answer 1

Goods and Services Tax

- a 10% tax levied by the federal government on sales of goods and services

Question 2

Source Documents

Answer 2

The pieces of paper that provide both the evidence that a transaction has occurred, and the details of the transaction itself

Question 3

Cash Receipt

Answer 3

Cash receipt (1)
a source document used to verify cash received
Cash receipt (2)
a transaction that occurs when cash is received from another entity

Question 4

Drawee

Answer 4

The financial institution or bank of the drawer

Question 5

Drawer

Answer 5

The entity writing the cheque

Question 6

Payee

Answer 6

The entity who is receiving the cheque or to whom the cheque is written

Question 7

Not Negotiable

Answer 7

A control mechanism that ensures that the cheque can only be deposited into the account of the nominated payee

Question 8

Cheque Butt

Answer 8

A source document used to verify cash payments

Question 9

Invoice

Answer 9

A source document used to verify credit transactions

Question 10

Memo (Memoranda)

Answer 10

A source document used to verify internal transactions

Question 11

Service Business

Answer 11

A small business that operates by providing its time, labour or expertise (or a combination of all three) in return for a fee or charge

Question 12

Journal

Answer 12

An accounting record which classifies and summarises transactions
during a particular reporting period

Question 13

Statement of Receipts and Payments

Purpose

Answer 13

An accounting report which lists cash receipts and payments during a reporting period, the change in the bank balance, and the opening and closing bank balance.

1. To provide cash flow information for a period
2. To provide a cash position AS AT a point in time

Question 14

Single-entry Accounting

Answer 14

The process of recording transactions in journals and then using the summarised information to prepare reports

Question 15

Cash Receipts Journal

Answer 15

An accounting record which classifies and summarises all cash received from other entities during a particular reporting period

Question 16

Cash Payments Journal

Answer 16

An accounting record which classifies and summarises all cash paid to other entities during a particular reporting period

Question 17

Cash Surplus

Answer 17

An excess of cash receipts over cash payments, leading to an increase in a positive bank balance or decrease in a bank overdraft

Question 18

Cash Deficit

Answer 18

An excess of cash payments over cash receipts, leading to a decrease in a positive bank balance or an increase in
a bank overdraft

Question 19

GST Payable

Answer 19

GST owed by the business to the ATO when the amount of GST the business has received on its fees is greater than the GST it has paid to its suppliers

Question 20

GST Settlement

Answer 20

A payment made to the ATO by a small business to settle GST payable

Question 21

GST Receivable

Answer 21

GST owed to the business by the ATO when the amount of GST the business has paid to its suppliers is greater than the GST it has received on its fees

Question 22

GST Refund

Answer 22

A cash receipt from the ATO to clear GST receivable

Question 23

Verifiable document for cash receipts versus cash payments

Answer 23

Cash receipts Cash payment

• Cash receipt. - cheque butt
• Cash register roll - bank statement
• Bank statement