BAF3M Grade 11 Accounting

Unit 3 Test
BAF3M Grade 11 Accounting Unit 3 Test Study Notes
Topics to Review:
Expanding the ledger
The income statement
Equity relationships and the balance sheet
Simply accounting: spreadsheets and the expanded ledger
The journal
Source documents
Provincial sales tax
Building spreadsheet models
Vocabulary/Key Phrases
Transparency: being able to see more of the financial status of a business
Near Cash: things being very close to cash in terms of liquidity, e.g. a saving
bond
CD: certificate of deposit an investment
Progress Payments: relates to the time period concept and possibly the
matching principle and occurs when payments for a final sale are received
gradually deals with fiscal periods
Double Taxation: businesses are able to receive GST receivable to prevent being
double taxed by the government
Flat: indicates that a transaction has no real impact
Capital Injection: credit OE, debit bank

VOID: not valid anymore

Audit Trails: some sort of information that can be used by auditors to find out
more about a business
POS Terminal: the point of sale register that allows for electronic transfers of
funds
HST: Harmonization tax mix of GST and PST
GST: Goods and services tax
PST: Provincial sales tax
Communication Topics
GAAPs Page 755
Business Entity Concept: the accounting for a business is separate from the
personal accounting of the owner
Continuing Concern Concept: assumes a business will continue to operate unless
it is known that it will not
Principle of Conservatism: accounting in a business must be fair and reasonable
Objectivity Principle: accounting must be done on the basis of objective
evidence
Revenue Recognition Convention: revenue is recorded at the time the
transaction is made
Time Period Concept: accounting takes place over consistent time periods, AKA
fiscal periods

Matching Principle: each expense item related to revenue must be recorded in

the same accounting period as the revenue earned
Cost Principle: accounting for purchases must be at the cost price to the
purchaser
Source Documents Page 172
Cash Sales Slip: sale of goods/services through cash debit bank and credit
sales/revenue
Sales Invoice: sale of goods/services on account debit accounts receivable and
credit sales/revenue
Purchase Invoice: purchase of goods/services on account debit either an
expense account or asset account, and credit accounts payable
Cheque Copy: paying for an account receivable, cash purchase/payment of an
asset/expense, drawings debit a liability/asset account, expense/drawings
account and credit bank
Cash Receipts Daily Summary: cheques received to pay for A/R debit bank and
credit A/R
Bank Debit Advice: bank account decreases debit an expense account and
credit bank
Bank Credit Advice: bank account increases debit bank and credit revenue
account
Application Topics:
how to expand the ledger trial balances, T-accounts, and balance sheets
how to write an income statement
how to create a chart of accounts
how to fill out a two-column journal

 how to use source documents

how to apply taxes to financial statements