ACCOUNTING I Chapter 3 (10ed) Reading Guide. 1. What is a form for recording transactions in chronological order called?

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1 Due: Name: Hour: ACCOUNTING I Chapter 3 (10ed) Reading Guide Answer the following questions as you read Chapter 3, pages Lesson 3-1 Recording Transactions and the General Journal 1. What is a form for recording transactions in chronological order called? 2. A journal makes recording entries more manageable than recording in the accounting equation. What else is an advantage to using journals? 3. What is journalizing? 4. What two things help a business decide which type of journal to use? 5. How often do businesses record transactions in journals? 6. What is a general journal? 7. How can data in a journal be verified as correct?

2 8. Why are journal entries recorded in chronological order? 9. What is an entry? 10. What does double-entry accounting assure? 11. What is a source document? 12. Which accounting concept is being applied when there is a source document prepared for each transaction? 13. What are the five source documents described in this chapter? 14. What is the source document for a cash payment? Why are these documents prenumbered? 2

3 15. What is the source document used when selling to a customer on account? 16. What is a sales invoice also called? 17. How many copies of a sales invoice are usually made? What is done with these copies? Why are they usually prenumbered? See the FYI box on page 60. Why is it important for businesses to keep (file) source documents? 20. What is a cash receipt? 21. When is a receipt prepared? 22. When is a memorandum used? Give two examples. 23. How does a calculator tape save time? 3

4 24. In the diagram for a calculator tape at the bottom of page 61, what does the T in T10 stand for? And the 10 in T10? 25. What does it mean when it is said that a journal is the book of original entry? 26. Because a journal is a permanent record, what should you use to record journal entries? Pencil or ink? 27. The text says that you should enter.00 when there are no cents for an amount. Why should you enter this? (BTW, Mrs. Ewert disagrees about the.00 being the only method to record no cents. You can also enter. ) 28. What are the four parts to an entry? 29. What is true about debits and credits for each entry in a journal? 30. How often is the year written on a general journal page (see steps, p. 62)? 4

5 31. On the steps on page 63 (which explain the journal entry for Paid Cash for Supplies), why is the month and year not written on the page? 32. See the FYI box at the bottom of page 63. Why is spelling important in accounting? Lesson 3-2 Transactions Affecting Prepaid Insurance and Supplies 33. For the transaction, paid cash for insurance, which account is debited? 34. For the transaction on page 65, what does the abbreviation C2 stand for the in the Doc. No. column of the General Journal? 35. For the transaction, bought supplies on account from Canyon Office Supply, which account is credited? 36. Why was a memorandum prepared for the source document for the entry on page 66? 37. See the FYI box at the bottom of page 66. Account titles in journal entries are not usually abbreviated. When is it acceptable to abbreviate an account title? Besides Accts. Pay. being an acceptable abbreviation, what other abbreviation could have been used for Accounts Payable? 5

6 38. For the transaction, paid cash on account to Canyon Office Supply, which account(s) decrease? 39. See the FYI box at the bottom of page 67. What does SBA stand for? What is the purpose of the SBA? Their web site address ends in.gov. What would this indicate? Not sure? Google it. 40. See the Careers in Accounting box on page 68. What does a forensic accountant do? Give two examples of cases a forensic accountant may work on. What is the salary range for a forensic accountant? Lesson 3-3 Transactions Affecting Owner s Equity and Asset Accounts 41. In the transaction Received cash from sales, which account(s) increase? 42. In the transaction Sold services on account to Main Street Services, which account is the debit? What type of source document is used for a sale on account? 6

7 43. In the transaction Paid cash for communications bill, which account title is debited? 44. See the FYI box on page 72. Why might you still use T-Accounts when journalizing entries? 45. In the transaction Received cash on account from Main Street Services, which account(s) decrease? 46. In the transaction from the question above, what does the Doc. No. R2 mean. 47. When the owner takes something out of the business for personal use, which account is debited? 48. See the FYI box on page 74. List two characteristics of successful small business owners. Lesson 3-4 Starting a New Page 49. When is a journal page finished? 7

8 50. Why should you never begin entering a transaction when there is only one blank line on the page? 51. How is a new journal page started? 52. In your own words, what are the accounting practices that Delgado Web Services follows when correcting errors in journal entries? If it applies, describe what you would do for each step. 8

Column II. 2. A ledger that contains all accounts needed to prepare financial statements. (p. 94)

Column II. 2. A ledger that contains all accounts needed to prepare financial statements. (p. 94) Study Guide 4 Name Identifying Accounting Terms Identifying Accounting Concepts and Practices Analyzing Posting from a Journal to a General Ledger Total Perfect Score 7 Pts. 20 Pts. 13 Pts. 40 Pts. Your