Basic Accounting Terms — Flashcards

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An event is anything that brings about a change in the financial position of a business. It is the result of a transaction. Example: when business activities lead to profit, closing stock, cash balanc…

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A transaction is a kind of event involving some value between two or more persons. It includes dealing between two or more persons involving exchange of goods or services for a consideration. A transa…

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The four kinds are: cash transactions, credit transactions, barter transactions, and paper transactions. Cash transactions involve cash. Credit transactions do not involve immediate cash payment. Bart…

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A voucher is a documentary evidence in support of a transaction. It is prepared by an accountant and signed by an authorized person. Vouchers are serially numbered and related source documents are att…

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The principle of vouching is: there should be no entry without its voucher and no voucher without its entry. This means every accounting entry must be supported by proper documentary evidence.

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A debit voucher is a cash voucher prepared when payment is made to creditors, money is deposited into bank, or payment of an expense is made. It records cash outflow or payment by the business.

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A credit voucher is a cash voucher prepared when payment is received in cash or through cheque for sale of goods, money withdrawn from bank, or payment received from debtors. It records cash inflow or…

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A non-cash voucher, also called a transfer voucher, is prepared when a transaction does not involve cash. It is used for credit sales, credit purchases, goods returned, and rectification of errors.