unit 4 accounting cycle

4-1The Accounting Cycle 4-1 Source Documents Invoice Receipt Deposit Slip Check Counterfoil Statement Payment Confirmation The first documents that exist relating to a transaction Serve as proof for a transaction (include date and time) Why source documents Invoices normally relate to credit transactions lists goods or services  suppliers normally send an invoice with goods (or once services have been delivered) Inidicate payment terms (time) "Bills" Receipts confirm that services or goods have been recieved. normally relate to cash transactions. Deposit Slip proof that cash has been deposited in a bank accountCheck Counterfoil This is the part of the check kept by the drawer (writer) of the check as a record of the transactionStatement A report showing: the amount owed by one business to another. Details of transactions between the two businesssesCash Receipts JournalWhere you record all cash that has been received major categories of receipts such as from income or from debtors receive their own column the category called "sundry" is used to represent less regular items such as capital or receiving cash from a loanthe word sundry means various miscellaneous or generalthe bank column is added up to show the total cash received for the period concernedCash Payments Journalwhere you record all transactions where cash has been paid out Sales Journalwhere you record income on creditdebtor transactions 4-5 trial b alance and financial statements complete trialbalance prior to creating financial statements test of balances ensures debits = credits uses closing balances from the general ledger (t accounts) 1. Income Statement shows profit or loss of a business includes income and expenses accounting period (usually 1 year) 2. The Statement of Owners Equity changes to owners equity capital, drawings, profit 3.  3. Balance Sheetwhereas the income statement and statement of changes in equity show changes over a certain period of time, the balance sheet shows the balances of assets, liabilities, and owners equity on a particular day4. cash flow statement a statement (report) of flows (both in and out of the business) of cash includes operating, investing, financing, net incresse/ decrease in cash

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