Sources And Recording Of Data
Overview
Somewhere in a shop this morning a customer took a printed slip, folded it, and put it in a pocket. That slip is the beginning of accounting. Before anyone can say whether a business made a profit, someone has to capture what happened, in writing, at the moment it happened. Every number in a set of financial statements can be traced back down the chain to a piece of paper that recorded one real event.
This lesson follows that chain from end to end. You will learn which document is created by which event, which of the seven books of prime entry it is written into, how it reaches the ledger as a pair of equal and opposite entries, and how those ledger balances finally become an income statement and a statement of financial position. You will complete an invoice, rule off a customer account, and run a petty cash book on the imprest system, which are the three tasks this content area is examined by most often.
Objectives
- The double entry system including understanding of the use and the preparation of source documents.
- The recording of transactions from source documents in books of prime entry and ledger accounts and transferring accounts to financial statements.
- Prepare and understand accounting records based on source documents and use the main books of prime entry and ledger accounts to record transactions. Prepare and understand the use of the imprest system to record petty cash.
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Sources And Recording Of Data. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which document does a supplier send to a customer to reduce the amount owed after an overcharge? A. Credit note B. Debit note C. Paying-in slip counterfoil D. Statement of account Answer: A
- In which book of prime entry is a petty cash voucher recorded? A. Cash book B. General journal C. Petty cash book D. Purchases journal Answer: C
- Where is the personal account of a credit supplier kept? A. General ledger B. Payables ledger C. Purchases journal D. Receivables ledger Answer: B
- Goods with a list price of $500 are sold on credit less 20% trade discount. What amount is entered in the sales journal? A. $100 B. $400 C. $480 D. $500 Answer: B
- What is the double entry when the owner pays $600 of office cash into the business bank account? A. Debit bank, credit capital B. Debit bank, credit cash C. Debit cash, credit bank D. Debit cash, credit sales Answer: B
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Recommended Books
Further learning from open sources
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Textbook section
Use Journal Entries to Record Transactions and Post to T-Accounts
"Principles of Accounting, Volume 1: Financial Accounting: Use Journal Entries to Record Transactions and Post to T-Accounts" by OpenStax, OpenStax, Rice University, licensed under CC BY-NC-SA 4.0 (https://creativecommons.org/licenses/by-nc-sa/4.0/). Source: https://openstax.org/books/principles-financial-accounting/pages/3-5-use-journal-entries-to-record-transactions-and-post-to-t-accounts. Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-introduction
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Textbook section
Define and Describe the Initial Steps in the Accounting Cycle
"Principles of Accounting, Volume 1: Financial Accounting: Define and Describe the Initial Steps in the Accounting Cycle" by OpenStax, OpenStax, Rice University, licensed under CC BY-NC-SA 4.0 (https://creativecommons.org/licenses/by-nc-sa/4.0/). Source: https://openstax.org/books/principles-financial-accounting/pages/3-3-define-and-describe-the-initial-steps-in-the-accounting-cycle. Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-introduction
Published by other organisations under open licences, credited as they ask. Links open their websites.
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