WA2

what is a trail balance?

a list of all ledger accounts and their ending balances at a given date

what is the purpose of having a trail balance?

1. to ensure the arithmetic accuracy in recording

2. to facilitate the preparation of finanacial statement

what is a trail balance?

a list of all ledger accounts and their ending balances at a given date

what is the purpose of having a trail balance?

1. to ensure the arithmetic accuracy in recording

2. to facilitate the preparation of finanacial statement

what is the limitations of a trail balance?

there may be errors that are not revealed by a trail balance

how will finical statement of position look like?

sales revenue

less: sales return

net sales revenue

less: cost of sales

gross profit/loss

add: other income

less: other expense

profit/loss of the year

how will the finical statement of position look like?

Asset

NCA

CA

total asset

Equity and Liability

OE

NCL

CL
total equity and liability

what is the order for each transition in accounting information system?

source document → journal → ledger → trail balance → financial statement

what is the purpose of source document?

provides evidence that transitions have taken place

What is the accounting concept used in accounting information system and how does it work?

Objectivity concept. Accounting information recorded must be supported by reliable and verifiable evidence in order for financial statement to be free from opinions and biases.

what is the purpose of an invoice?

to inform credit customers the amount owed after goods is sold or service is provided on credit

what is the purpose of an credit note?

to inform credit customers of a reduction in the amount owed due to either overcharge or sales returns.

what is the purpose of an receipt

to acknowledge payment received from credit customers

what is the purpose of an debit note?

to inform credit customers of an increase in amount owed due to undercharges

what is the purpose of an payment voucher?

to inform business of payment to credit suppliers

what is the purpose of an remittance advice?

to inform credit suppliers that payment by cheque has been made for a specific invoice

what is the purpose of an bank statement?

to state the deposits and withdrawals made from bank account and remaining bank balance.

examples of receipt?

cash sales, cash purchases, receipt of money and payment of money

examples of invoice?

credit sales & credit purchase

examples of bank statement?

receipt of money, payment of money & bank changes

examples of remittance advice?

receipt of money

examples of payment voucher?

payment of money

examples of credit note?

sales return or overcharges

examples of debit note?

undercharges