chapter 6 vocab

Question 1

The various activities a business completes to organize its accounting records in an orderly fashion

Answer 1

Accounting cycle

Question 2

Any type of business paper that verifies that a transaction occurred. Evidence of a transaction tracking payments requested and made by companies and their customers

Answer 2

Source document

Question 3

A source document that lists the quantity, description,
unit price, and total cost of the items sold and shipped
to a buyer. SENT to a CLIENT/CUSTOMER to request payment for a product or service sent BEFORE the customer HAS PAID money (on-account transaction)

Answer 3

Invoice

Question 4

A source document that serves as a record of cash
received. Produced AFTER the customer has paid by CASH or CHECK as payment of a product or service

Answer 4

Receipt

Question 5

A brief written message that describes a transaction
that takes place within a business. Written documentation describing a transaction that took place (EX: Personal owner investments in a company, owner withdrawals)

Answer 5

Memorandum

Question 6

A source document that lists the same information
that appears on a check and shows the balance in
the checking account before and after each check is
written. Info from a check that has to be writtenand presented for payment of something.

Answer 6

Check stub

Question 7

record/book of original entry fpr a business’s transactions

Answer 7

Journal

Question 8

A term used for recording a business transaction

Answer 8

Journalizing

Question 9

Accounting period of USUALLY 12 months (does not have to be) does NOT have to start on Jan 1 and end on Dec 31

Answer 9

Fiscal year

Question 10

Accounting period begins on January 1 and ends on December 31

Answer 10

Calendar year

Question 11

All-purpose journal used for recording business transactions

Answer 11

General Journal

Question 12

A business owned by ONE person (may have multiple managers and employees, the oldest and most common form of business organization)

Answer 12

Sole propiertorship

Question 13

Steps of the accounting cycle of a sole proprietorship

Answer 13

1) Collect and very source document information
2) Analyze transactions
3) Record transactions in general journal
a) Date
b) Name account debited
c) amount of debit
d) name of account credited
e) amount of credit
f) source document reference

Question 14

How to correct journal error (dont delete them)

Answer 14

Draw ONE line “single rule” THROUGH the journal and then enter correcting entries

Question 15

Why are accounting and fiscal periods used?

Answer 15

To make financial comparisons possible