Ch7 Source documents Acc 3/4

memo

internal source documents (produced by the business) used to verify transactions that are not verified by the other source documents

transactions verified by a memo include...

non-cash contributions by owner

non-cash drawings by owner

establishment of a double-entry system (for an existing business)

correction of errors

use of inventory for advertising purposes

inventory losses and gains

inventory write downs

closing entries

balance day adjustments

order forms

are a document requesting inventory, supplies, assets.

shipping confirmation

specifies an order has been disatched but is not yet in the contro of the business

delivery docket

lists items and quantities, should be used to check correct amounts have arrived

fair value

the price of an asset contributed by the owner if the asset was sold at time of contribution to the business

ethical considerations for fair value

choosing a fair value for an asset contributed by the owner, that takes account of the current market evaluations and the independent valuations will aim to FAITHFULLY REPRESENT the value of the asset. the valuation should be neutral without bias.

commencing entry

a General Journal entry to establish double-entry records by entering existing asset, liability and owner's equity balances in the General Ledger accounts

correcting entry

a General Journal entry to correct an error in the way a transaction is recorded in the General Journal or General Ledger

order form

a document issued by a business requesting the supply of inventory or other goods

order confirmation

a document issued by the supplier confirming the receipt of an order (for inventory)

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