Key Terms: Chapter 3

Question 1

Financial Documents?

Answer 1

Source documents for the accounting records

Question 2

Book of Prime Entry

Answer 2

The First Accounting Books in which transactions are recorded

Question 3

Coding

Answer 3

Cross-referencing methods used to trace transactions through the accounting system.

Question 4

Ledger

Answer 4

Collection of Accounts within the accounting system

Question 5

Debit Entry

Answer 5

Records a gain in value

An asset

or An expense

Question 6

Credit Entry

Answer 6

Records the giving of value

A liability

or an income item.

Question 7

Sales

Answer 7

The sale of goods in which the business trades

Question 8

Revenue Income

Answer 8

Income from the goods in which the business trades

Question 9

Capital Income

Answer 9

Income from items other than the goods in which the business trades

(eg. a Shop selling its old cash till)

Question 10

Sales Returns

Answer 10

Goods previously sp;d on credit which are returned to the business by its customers.

Question 11

Sales Day Book

Answer 11

Books of prime entry

Prepared from Sales Invoices

Question 12

Sales Returns Day Book

Answer 12

Day Book

Prepared from Credit Notes issued to customers

Question 13

Analysed Sales Day Book

Answer 13

Day Books which incorporate analysis columns

For example between

• Different Departments
• Different categories of goods sold / services supplied.

Question 14

General Ledger

Answer 14

Ledger Section which includes

• Sales Account
• Sales Returns Account
• Sales Ledger Control Account
• VAT Account

Question 15

Memorandum Account

Answer 15

A Subsidiary ledger (eg. Sales Ledger) account which provides a records of individual amounts (eg. Owin by receivables to the business)