Topic 3.1-3.4 - p1+p2 Flashcards
What are the two types of business transactions?
Bought or sold
Refers to the basic nature of business transactions involving the exchange of goods or services for money.
What are the source documents used by businesses?
- Sales invoices
- Purchase invoices
- Credit notes
- Cheque counterfoils
- Paying-in slip counterfoils
- Cash receipts
- Till rolls
- Bank statements
These documents are essential for recording transactions and maintaining accurate financial records.
What is a sales invoice?
A document given to a buyer when supplying goods or services on credit, including details of the goods/services and the amount to be paid.
This document serves as a request for payment.
What is a purchase invoice?
Received by the buyer when goods or services are bought on credit; it is a sales invoice for the seller.
The title will generally just state ‘invoice’.
What are credit notes used for?
To show that goods have been returned and do not need to be paid for.
Common reasons for returns include damaged, faulty, or incorrect goods.
What are the two ways the term ‘credit note’ is used by a business?
- When goods have been returned by customers (sales returns)
- When goods received by the business are returned to suppliers (purchase returns)
Both types of returns must be recorded separately in the bookkeeping system.
What should be recorded separately in the financial statements?
Sales returns and purchase returns
This separate recording is crucial for accurate financial reporting.
Fill in the blank: A _______ is a document that a seller gives to a buyer when supplying goods or services on credit.
[sales invoice]
True or False: A purchase invoice is the same as a sales invoice.
True
Each invoice represents a sales transaction from the seller’s perspective and a purchase transaction from the buyer’s perspective.
What types of receipts are included in the source documents?
- Cash receipts
- Till rolls
These documents provide proof of cash transactions.
6 books of prime entry
Sales journal
Purchases journal
Sales returns journal
Purchase return journal
Cash book
General journal
Sales journal
Lists invoices for cr sales
Purchases journal
Lists invoices for cr purchases
Cash book
Record bank receipts and banks payments
Three column cashbook has extra column for cash discounts all and rec
Rec and pay ledgers
T accounts for each credit customer (R) and supplier (P)
