Lesson 6: Operating Cycle of a Merchandising Business

Question 1

It is an original record which contains the detail that supports or substantiates a transaction that will be (or has been) entered in an accounting system.

A document that contains transaction modifying the equation.

Answer 1

Source Documents

Question 2

It is a document supporting the accounting entry for payment by cheque.
It is THE source document; It is ONLY a document.

Answer 2

Cheque Copy

Question 3

What are the source documents?

Answer 3

• Cheque
• Bank Statement
• Debit Memo
• Credit Memo
• Payroll
• Business Document

Question 4

The Employees Earnings Record Card

The summary of the payroll is the source document.

Answer 4

Payroll

Question 5

Documents that will lead to the creation of source documents. A contract of rent without payment and without occupation of the premises yest is a business document. These are documents proving a commercial transaction THAT HAS NOT YET AFFECTED the Assets, Liabilities and Capital of the business.

Answer 5

Business Document

Question 6

Source Documents

Transactions

Answer 6

Investment
Cash sales
Account sales
Purchase of supplies
Purchase of merchandise
Received bills
Paid bills
Paid rent
Paid expenses
Acquire loans

Question 7

Source Documents

Assets?

Answer 7

Cash
Accounts receivable
Allowance for Bad debt
Supplies
Prepayments
Equipment
Building
Accumulated
Depreciation
Land

Question 8

Source Documents

Liabilities?

Answer 8

Accounts payable
Notes payable
Mortgage payable
Unearned revenue

Question 9

Source Documents

Capital?

Answer 9

Corrales, Capital
Corrales, Drawing
Revenue
Supplies Expense
Rent
Utilities
Bad debts
Depreciation

Question 10

Books of Accounts

Answer 10

Journal

Ledger

Question 11

Recording of External Transaction Process

Answer 11

Analyze the Source Document
Journalize External Transactions
Post to the ledger the journal entries
Balance the ledger accounts and summarize
Prepare the unadjusted trial balance

Question 12

Recording of Internal Transactions

Answer 12

Analyze the Unadjusted balance
Journalize the Internal Transactions
Post to the ledger the adjusting entries
Balance the Ledger Accounts & Summarize
Prepare the Adjusted Trial Balance

Question 13

Preparation of Financial Statements flow

Answer 13

Analyze the Adjusted trial balance
Prepare Income Statement
Prepare Capital Statement
Prepatr Balance Sheet
Prepare Cash flow

Question 14

Recording of Closing Entries

Answer 14

Analyze the Income & Capital Statement
Journalize the Closing Entries
Post to the ledger the closing Entries
Balance the Ledger Accounts & Summarize
Prepare the Post Closing trial balance

Question 15

Recording of Reversing Entries

Answer 15

Analyze adjusting Entries on Accruals & Deferrals

Prepare the Reversing Entries