1. The first step in the processing of a transaction
is to analyze the transaction and source documents.
2. Preparation of a trial balance is the first step in
the analyzing and recording process.
3. Source documents provide evidence of business
transactions and are the basis for accounting entries.
4. Items such as sales tickets, bank statements,
checks, and purchase orders are source documents.
5. An account is a record of increases and decreases
in a specific asset, liability, equity, revenue, or expense item.
6. A customer’s promise to pay is called an account
payable to the seller.
7. Withdrawals by the owner are a business
8. Land and buildings are generally recorded in the
same ledger account.
9. Unearned revenues are liabilities.
10. Cash withdrawn by the owner of a proprietorship
should be treated as an expense of the business.
11. When a company provides services for which cash
will not be received until some future date, the company should record the
amount charged as unearned revenue.