Accounting and Finance Foundations

Unit 5

Accounting and Finance Foundations Unit 5: Accounting Terminology 420

Accounting Terminology

Calculator tape: Businesses collect cash at the

time services are rendered to customers. At the end

of each day, a business uses a printed electronic

calculator tape that shows the total amount of cash

received from sales for that day. By totaling all the

individual sales, a single source document is

produced for the total sales of the day.

Chapter 15

Student Guide

Lesson 15.1 Source Documents (cont’d)

Now that you are familiar with the terms associated with source documents, here is what a cycle for using

source documents looks like.

n Jimmy is an employee at XYZ Corporation, authorized to make a purchase from Office Supply

Company.

n XYZ Corporation requires the use of purchase orders.

n Jimmy places an order with Office Supply Company for print cartridges.

n At the time the order is placed, he uses purchase order number 1234.

n Office Supply Company ships the cartridges, along with an invoice for the total amount due.

n When the invoice gets to the accounts payable department at XYZ Corporation, the invoice is

matched with the purchase order number.

n When the accounts payable department confirms the amount on the purchase order with the

amount invoiced, a check is written to pay the amount charged.

n The check, which includes the invoice number, is then sent to Office Supply Company, completing

the purchasing cycle.

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