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 expense. 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 Cash withdrawn by the owner of a proprietorship should be treated as an expense of the business. 11.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.
