AC2 - The Accounting Cycle

AC2 - Financial Literacy

What is the first step in recording transactions?

Record transactions on a document.

What does the Cash Receipts Journal (CRJ) record?

All cash receipts transactions of the business.

What does the Cash Payments Journal (CPJ) record?

All cash payments transactions of the business.

What is the purpose of cash journals in a service business?

To record day to day transactions and summarize similar transactions.

What is drawn up to check the accuracy of accounts?

A Trial Balance.

What does an Income Statement show?

All income minus all expenses.

What does a Balance Sheet display?

The financial position of the business: assets, liabilities, and owner's equity.

What are T

accounts?

What should be equal in a Trial Balance?

All debit balances should equal all credit balances.