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Describes the buying or selling of an item on account. Normally contains date of transaction, the quantity, description and cost of each item, and the payment terms.

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Evidence of business transactions.

Invoice

Describes the buying or selling of an item on account. Normally contains date of transaction, the quantity, description and cost of each item, and the payment terms.

Receipt

A record of cash received by a business. It indicates the date the payment was received, the name of the person or business from whom the payment was received, and the amount of the payment.

Memorandum

A brief written message that describes a transaction that takes place within a business. A memorandum is often used if no other source document exists for the business transaction.

Check Stub

Lists the same information that appears on a check: The date written, the person or business to whom the check was written, and the amount of the check. Also shows the balance in the checking account before and after each check is written.

The first step in the Accounting Cycle

Collecting and verifying source documents.

The second step in the Accounting Cycle

Analyzing business transactions.

The third step in the Accounting Cycle

Recording business transactions in a journal.

Journal

A record of the transactions of a business.

Journalizing

The process of recording business transactions in a journal

Different types of accounting periods

Fiscal year or calendar year

Fiscal Year

An accounting period of 12 months

Calendar Year

Begins on January 1 and ends on December 31

Accounting Period

Can be any designated length of time such as a month, quarter, or year.

One Year

Most businesses use as their accounting period.

General Journal

An all-purpose journal in which all of the transactions of a business may be recorded.

Left Column

Used to record debit amounts

Right Column

Used to record credit amounts

Include: Invoice, receipt, memorandum, check stub

How do you correct a journal error?

Draw a line through it with a pen and enter the correct information above the line.

 
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