unit 4 accounting cycle

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4-1The Accounting Cycle 4-1 Source Documents

Invoice

Receipt

Deposit Slip

Check Counterfoil

Statement

Payment Confirmation

The first documents that exist relating to a transaction

Serve as proof for a transaction (include date and time)

Why source documents Invoices

normally relate to credit transactions

lists goods or services

suppliers normally send an invoice with goods (or once services have been delivered)

Inidicate payment terms (time) "Bills"

Receipts

confirm that services or goods have been recieved.

normally relate to cash transactions.

Deposit Slip proof that cash has been deposited in a bank account

Check Counterfoil This is the part of the check kept by the drawer (writer) of the check as a record of the transaction

Statement A report showing: the amount owed by one business to another. Details of transactions between the two businessses

Cash Receipts Journal

Where you record all cash that has been received

major categories of receipts such as from income or from debtors receive their own column the category called "sundry" is used to represent less regular items such as capital or receiving cash from a loan

the word sundry means various miscellaneous or general

the bank column is added up to show the total cash received for the period concerned

Cash Payments Journal

where you record all transactions where cash has been paid out

Sales Journal

where you record income on credit

debtor transactions 4-5 trial b alance and financial statements

complete trialbalance prior to creating financial statements

test of balances

ensures debits = credits

uses closing balances from the general ledger (t accounts)

1. Income Statement

shows profit or loss of a business

includes income and expenses

accounting period (usually 1 year)

2. The Statement of Owners Equity

changes to owners equity

capital, drawings, profit

3. 3. Balance Sheet

whereas the income statement and statement of changes in equity show changes over a certain period of time, the balance sheet shows the balances of assets, liabilities, and owners equity on a particular day

4. cash flow statement

a statement (report) of flows (both in and out of the business) of cash

includes

operating, investing, financing, net incresse/ decrease in cash

Alex Lopez

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