Accounting Books and Statements — Flashcards

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A source document is the origin of a transaction and it initiates the accounting process. It gives information about the nature and amount of a transaction. Examples include vouchers, invoices, bills,…

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Source documents support every recorded transaction with evidence. They help in checking the correctness of entries and form the basis of recording in the books of account.

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Journal is a book of original entry. Transactions are recorded in it in chronological order, that is, day by day. It is used for the first recording of transactions before they are posted to the ledge…

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Journalising is the process of recording transactions in the journal. It includes analysing the transaction, deciding which account is to be debited and which is to be credited, and then writing the e…

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Narration is a brief explanation written below a journal entry. It gives necessary details about the transaction and helps in understanding the entry clearly.

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The modern practice is to omit the words 'Dr' and 'To' from journal entries. The meaning of the entry is still understood from the debit and credit sides.

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Journal is used for opening entries, closing entries, transfers from one account to another, rectification of errors, adjusting entries, and entries relating to dishonour of bills.

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Cash transactions are recorded directly in a separate cash book so that cash balance can be known easily every day. This reduces the use of journal proper.