4.1.1 ACCOUNTING CYCLE

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20 Terms

1

Business Transactions

Financial events that change the assets, liabilities, and equity of a business entity.

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2

What is the purpose of business documents in accounting?

They serve as the basis for recording business transactions.

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3

What is a purchase requisition?

A document issued by the Sales Department to the Purchasing Department listing goods to be ordered.

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4

What does a purchase order represent?

An order of goods from a buyer to a seller.

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5

What information is contained in a receiving report?

The quantity and condition of goods received, as inspected by the Receiving Department.

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6

What is a sales invoice?

A document issued by the seller to the buyer upon delivery of goods.

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7

What does a purchase invoice indicate?

It details the delivery of goods from the seller to the buyer.

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8

What is the purpose of a credit note?

To document the return of goods or provide allowances from seller to buyer.

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9

How does a debit note function in business transactions?

It allows a buyer to document the return of goods or request for allowances.

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10

What is a statement of account?

A reminder or request from the seller to the buyer to make a payment.

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11

What does remittance advice inform?

That a payment has been made by the buyer to the seller.

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12

What is a receipt in terms of business transactions?

A document acknowledging that the seller has received payment from the buyer.

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13

What does a promissory note signify?

An agreement from a buyer to pay a seller at a later date.

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14

What is a voucher used for?

To document payments made either by cash or cheque.

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15

What distinguishes a petty cash voucher?

It is used for payments sourced from the petty cash fund.

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16

What is the purpose of an inventory take sheet?

To record the inventory count, which is the basis for determining ending inventory.

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17

What is a return in accounting?

The actual return of goods from the buyer to the seller.

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18

What does an allowance indicate?

A mere request for a price reduction without the actual return of goods.

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19

What are common reasons for returns and allowances?

Damaged goods, damage during delivery, or wrong specifications.

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20

What is the first step in the accounting cycle?

Analyzing business transactions from source documents.

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