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190) Describe what source documents are and the purpose they serve in a business. Answer: Source documents are the proof that transactions and events have occurred and should be recorded in the accounting records. They provide objective and reliable evidence about transactions and their amounts. Examples of source documents include checks, invoices, sales receipts, credit card statements, and bank statements. They can be in hard copy or electronic form. Difficulty: 1 Easy Topic: Analyzing and Recording Process Learning Objective: 02-C1 Explain the steps in processing transactions and the role of source documents. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making 191) What are the three groups of accounts shown on an unclassified balance sheet and define each group? Answer: Accounts are classified into three general groups: assets, liabilities and equity accounts. Assets are resources owned or controlled by a company. Liabilities are obligations to transfer assets or provide products or services to others. Equity is the owner's claim on a company's assets. Difficulty: 2 Medium Topic: The Account and Its Analysis Learning Objective: 02-C2 Describe an account and its use in recording transactions. Bloom's: Understand AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making 192) Explain the difference between a general ledger and a chart of accounts. Answer: A ledger is a record containing all of the accounts of a business and their balances. The chart of accounts is a list of all of the accounts a company uses and includes an identification number assigned to each account. A chart of accounts does not include account balances. Difficulty: 1 Easy Topic: Ledger and Chart of Accounts Learning Objective: 02-C3 Describe a ledger and a chart of accounts. Bloom's: Remember AACSB/Accessibility: Communication / Keyboard Navigation AICPA: BB Industry; FN Decision Making

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Test Bank for Fundamental Accounting Principles 24th Edition Wild  

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Test Bank for Fundamental Accounting Principles 24th Edition Wild  

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