BAF3M1: Grade 11 Accounting (Unit 2)

Accounting Cycles

Journal -- Ledger Posting -- Worksheet -- Adjustments (Trial Balance) -- Financial Statement [1. Income statement 2. Balance Sheet] -- Closing Entries -- Post Closing Trial Balance -- Source Documents

The Journal: Advantage of the Journal

All transactions are recorded in one place

Reduces Errors because you remember to record at least one debit and credit

Chronological History

Makes it possible to determine daily, weekly or monthly volume of business

Source Documents: Source Document

any business from that serves as evidence that a transaction has occured.

cash sales slip purchase invoice

sales invoice cheque copy

Types of Source Documents: Cash Sales

A slip is prepared for all cash sales by a business.

Types of Source Documents: Sales Invoice

A bill completed by the seller and given to the buyer as a record of credit sales.

Types of Source Documents: Purchase Invoice

A bill received by the purchaser as proof of a purchase on account.

Types of Source Documents: Cheques

Issued to make cash purchases and to pay bills. Cheques are also received as payments for amounts owned or when customers buy something for cash.

Types of Source Documents: Bank Credit Memo

gives notice of an increase in a customer's bank account.

Types of Source Documents: Bank Debit Memo

gives notice of a decrease in a customer's bank account

More Detail on the Balance Sheet

A Balance sheet in report form is prepared vertically.

Classified Balance Sheet

Lists items in current and fixed asset and current and long-term liabilities.

Assets: Current Assets

cash or something that can be converted into cash withing the year (i.e accounts receivable, prepaid expenses)

Assets: Fixed Assets

assets that have a long life (i.e Building, land, equipment, truck etc). Assets should be listed in order of liquidity. Item that would last the longest should be listed last.

Liabilities: Current Liabilities

liabilities due to be paid within a year (i.e Accounts Payable, taxes payable, loans payable and salaries payable)

Liabilities: Long-Term Liabilities

not due to be paid more than one year (i.e mortgage

Worksheet: Workshet

a device that organizes the accounting data required for the preparation of the financial statement.

Supporting Statements and Schedule: Statement of Owner's Equity

Describes the changes in the owner's equity for the accounting period.

Supporting Statements and Schedule: Schedule of Accounts Recievable

provides details about an item on a main statement.