Accounting Chapter 3

A business form ordering a bank to pay cash from a bank account.

check

The ______________ describes information about the cash payment for which the check is prepared.

check stub

In what order are transactions recorded in a journal?

chronological

The source document sales invoice is abbreviated as S in a journal entry.

true

The source document used when supplies are ordered by telephone on account is a memorandum.

true

When cash is received from sales, both the Cash account and the Sales account are increased.

true

When cash is received on account, one asset account increases and another asset account decreases.

true

When cash is used to pay for insurance, the asset account Prepaid Insurance increases.

true

In double-entry accounting, each transaction affects at least __________________.

two accounts

Sometimes an entire entry is incorrect and is discovered before the next entry is journalized. _______________________________ all parts of the incorrect entry.

Draw neat lines through

Information for each transaction recorded in a journal is called______________.

an entry

The _____________ is the source document for daily sales.

calculator tape

A business form ordering a bank to pay cash from a bank account is called a _________.

check

The recording of debit and credit parts of a transaction is called __________________________________.

double-entry accounting

Information for each transaction recorded in a journal.

entry

A memorandum is the source document used when items are paid in cash.

false

If there is only one blank line remaining on a journal page, it is standard practice to split the entry and record the second line of the entry on the next page.

false

The accounts affected when cash is received from the owner as an investment are Cash and Sales.

false

The accounts affected when paying cash to the owner for a withdrawal of equity are the Capital Account and Cash.

false

The source document used when supplies bought on account are paid for is a receipt.

false

To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place

false

When cash is paid for supplies, the Cash account is debited.

false

When services are sold on account, an asset account and a liability account are affected.

false

A form describing the goods or services sold, the quantity, the price, and the terms of sale.

invoice

A form for recording transactions in chronological order.

journal

Recording transactions in a journal.

journalizing

A _______________ is used when there is no other source document for a transaction. A ________________ is also used when an additional explanation is needed about a transaction.

memorandum

A form on which a brief message in written to describe a transaction.

memorandum

If an error is recorded, cancel the error by _________________________________ the incorrect item.

neatly drawing a line through

journals provide a _____________ record of transactions in a business.

permanent

A business form giving written acknowledgement for cash received.

receipt

An invoice used as a source document for recording sale on account. It is also referred to as a sales ticket or a sales slip.

sales invoice

A business paper from which information is obtained for a journal entry.

source document

Each transaction is described by a _________________________ that proves that the transaction did occur.

source document

A calculator tape is the source document for daily cash sales.

true

A receipt is the source document for cash received from transactions other than sales.

true

Examples of source documents include checks, sales invoices, receipts, and memorandums.

true

If an error is detected in a journal entry after several additional journal entries have been made, the entry should be corrected by drawing a line through the incorrect parts and writing the correct parts on the same line above the error.

true

Information in a journal includes the debit and credit parts of each transaction recorded in one place.

true

Sometimes several correct entries are recorded after an incorrect entry is made. The next blank lines are several entries later. Draw neat lines through all incorrect parts of the entry. Record the correct items on the same lines as the incorrect items, directly above the canceled parts

true

The Objective Evidence accounting concept requires that there be proof that a transaction did occur.

true

The accounts affected when paying cash for equipment rental are Equipment Rental Expense and Cash.

true