Transactions are first recorded by accounting personnel as journal entries Information comes from source documents Business transactions are initiated by the owner, sales-people, department supervisors, managers, and other authorized people Accounting is informed of transactions by means of business papers (source documents)
Source documents are kept on file for reference purposes, for locating errors, etc Auditors use them to verify accounting records
Is a business form showing the details of a transaction in which goods or services are sold to a customer for cash. Usually, there is an original and at least one copy.
Used for sales on account (non-cash sales). Shows the details of a transaction in which goods or services are sold on account.
Businesses will buy a variety of goods and services from numerous suppliers (typically). No single journal entry will do for all of the different items purchased. The account debited will depend on what particular goods or services are purchased. The account credited will always be the same – accounts payable.
Most business payments are still made by cheque A cheque copy is a document supporting the accounting entry for a payment cheque (see page 189) Most cheques are issued to pay for things previously bought on account and supported by purchase invoices on file Purchase invoices are summarized on the tear off portion of the cheque (fig. 6.9) A bill or receipt is needed to support the accounting entry for a cash purchase
Each day in business, some cheques are usually received from customers The cash receipts daily summary is a business paper that lists the money coming in for cash receipts It shows the names of the customers, the $ amount, and what the amounts are paying for in each case Remittances advices are used to complete this (p. 190 – fig. 6.10)
The bank may inform a business of transactions that either increase or decrease a business’s bank account. These come in two forms; 1. bank credit advice (increase in bank acct) 2. bank debit advice (decrease in bank acct)
Receipts for donations or postage Bills, such as hydro or telephone invoices Online banking transactions Insurance Written memos from the owner Bank statements Cash register tapes