Double Entry Bookkeeping Flashcards
What is a source document?
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.
List some common source documents.
- Purchase invoice
- Sales invoice
- Credit note
- Cheque counterfoil
- Till roll
- Cash receipt
- Paying-in slip counterfoil
- Bank statement
What information is typically found on a purchase invoice?
- 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
What is the fundamental principle of double-entry bookkeeping?
Every transaction affects at least two accounts.
What is a purchase invoice?
A purchase invoice is a document issued by a supplier to a buyer, detailing the goods or services provided, quantities, prices, and payment terms.
What is a sales invoice?
A sales invoice is a document issued by a seller to a buyer, detailing the goods or services provided, quantities, prices, and payment terms.
What is a credit note?
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.
What information is typically included on a purchase invoice?
- 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
Why are purchase invoices important for accounting?
Purchase invoices are essential for:
* Recording purchases in the purchase journal
* Calculating input VAT
* Tracking inventory levels
* Reconciling supplier accounts
How can purchase invoices be used to verify the accuracy of accounting records?
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
What is a sales invoice?
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.
Who issues a sales invoice?
A supplier or seller issues a sales invoice to a customer or buyer.
What information is typically included on a sales invoice?
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
How does a sales invoice compare to a purchase invoice?
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.
What is a credit note?
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
How can a credit note be used?
A credit note can be used to reduce the amount owed on an invoice.
What is a cheque counterfoil?
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.
What is a till roll?
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
What is a cash receipt?
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.
What is a paying-in slip counterfoil?
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.
What is a bank statement?
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.
What information does a bank statement typically include?
- Bank name and customer’s name
- Account number
- Statement period
- Opening balance
- Closing balance
- List of transactions (date, description, amount)
What are common types of transactions listed on a bank statement?
- Cheques paid in
- Cheques paid out
- Direct debits
- Standing orders
- Credit transfers
- Debit card payments
- Cash deposits
- Cash withdrawals
What is a credit balance on a bank statement?
A credit balance means the account has a positive balance, indicating that the customer has money available in the account.
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.
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.
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.
What is a credit transfer?
A credit transfer is a payment method where money is transferred electronically from one bank account to another.
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
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.
