Double Entry Bookkeeping Flashcards

1
Q

What is a source document?

A

A source document is a primary record of a business transaction.

It provides evidence of the transaction and is used to record the transaction in the accounting records.

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2
Q

List some common source documents.

A
  • Purchase invoice
  • Sales invoice
  • Credit note
  • Cheque counterfoil
  • Till roll
  • Cash receipt
  • Paying-in slip counterfoil
  • Bank statement
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3
Q

What information is typically found on a purchase invoice?

A
  • Supplier’s name and address
  • Invoice date and number
  • Customer’s name and address
  • Description of goods or services
  • Quantity and unit price
  • Total amount due
  • Payment terms
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4
Q

What is the fundamental principle of double-entry bookkeeping?

A

Every transaction affects at least two accounts.

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5
Q

What is a purchase invoice?

A

A purchase invoice is a document issued by a supplier to a buyer, detailing the goods or services provided, quantities, prices, and payment terms.

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6
Q

What is a sales invoice?

A

A sales invoice is a document issued by a seller to a buyer, detailing the goods or services provided, quantities, prices, and payment terms.

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7
Q

What is a credit note?

A

A credit note is a document issued by a seller to a buyer.

##Footnote

It acknowledges a refund or credit for returned goods or services, or for an error in a previous invoice.

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8
Q

What information is typically included on a purchase invoice?

A
  • Supplier’s name and address
  • Buyer’s name and address
  • Invoice number and date
  • Description of goods or services
  • Quantity of goods or services
  • Unit price
  • Total amount
  • Payment terms
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9
Q

Why are purchase invoices important for accounting?

A

Purchase invoices are essential for:
* Recording purchases in the purchase journal
* Calculating input VAT
* Tracking inventory levels
* Reconciling supplier accounts

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10
Q

How can purchase invoices be used to verify the accuracy of accounting records?

A

Purchase invoices can be used to:
* Verify the quantities and prices of goods or services purchased
* Check the accuracy of calculations
* Ensure that payments to suppliers are correct

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11
Q

What is a sales invoice?

A

A sales invoice is a document issued by a supplier to a customer.

## Footnote

It details the goods or services provided and the associated costs.

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12
Q

Who issues a sales invoice?

A

A supplier or seller issues a sales invoice to a customer or buyer.

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13
Q

What information is typically included on a sales invoice?

A

A sales invoice usually includes:
* Supplier’s and customer’s information
* Invoice date
* Invoice number
* Description of goods or services
* Quantity
* Unit price
* Total amount due
* Payment terms

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14
Q

How does a sales invoice compare to a purchase invoice?

A

Sales and purchase invoices are similar in layout and purpose. However, a sales invoice is issued by a supplier, while a purchase invoice is issued to a supplier.

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15
Q

What is a credit note?

A

A credit note is a document issued by a supplier to a customer to:
* Refund money for returned or faulty goods
* Correct a billing error
* Provide a discount

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16
Q

How can a credit note be used?

A

A credit note can be used to reduce the amount owed on an invoice.

17
Q

What is a cheque counterfoil?

A

A cheque counterfoil is the part of a cheque that is retained by the issuer.

## Footnote

It records details of the cheque, such as the date, payee, and amount.

18
Q

What is a till roll?

A

A till roll is a paper roll that records all transactions processed through a cash register.

## Footnote

It provides a detailed record of sales, refunds, and other transactions

19
Q

What is a cash receipt?

A

A cash receipt is a document that confirms a cash payment for goods or services.

## Footnote

It typically includes the date, amount paid, and a brief description of the purchase.

20
Q

What is a paying-in slip counterfoil?

A

A paying-in slip counterfoil is the part of a paying-in slip that is retained by the depositor.

## Footnote

It records details of the deposit, such as the date, amount of cash, and cheques deposited.

21
Q

What is a bank statement?

A

A bank statement is a document issued by a bank to its customer.

## Footnote
It details all the financial transactions that have occurred in the account over a specific period.

22
Q

What information does a bank statement typically include?

A
  • Bank name and customer’s name
  • Account number
  • Statement period
  • Opening balance
  • Closing balance
  • List of transactions (date, description, amount)
23
Q

What are common types of transactions listed on a bank statement?

A
  • Cheques paid in
  • Cheques paid out
  • Direct debits
  • Standing orders
  • Credit transfers
  • Debit card payments
  • Cash deposits
  • Cash withdrawals
24
Q

What is a credit balance on a bank statement?

A

A credit balance means the account has a positive balance, indicating that the customer has money available in the account.

25
What is a debit balance on a bank statement?
A debit balance means the account has a negative balance, indicating that the customer owes money to the bank.
26
What is a direct debit?
A direct debit is an automated payment system that allows organizations to withdraw funds directly from a bank account on a specific date.
27
What is a standing order?
A standing order is an instruction given to a bank to pay a fixed amount of money to a specific person or organization on a regular basis.
28
What is a credit transfer?
A credit transfer is a payment method where money is transferred electronically from one bank account to another.
29
How can a bank statement help a business?
* Track income and expenses * Identify errors or discrepancies * Reconcile bank accounts * Monitor cash flow * Prepare financial reports
30
What is bank reconciliation?
Bank reconciliation is the process of comparing the bank statement balance with the business's records to ensure they match and identify any differences.