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Adventist Youth Honors Answer Book/Vocational/Bookkeeping: A. Asset
Adventist Youth Honors Answer Book/Vocational/Bookkeeping: A. Asset
Book/Vocational/Bookkeeping
b. Liability
A liability is an obligation that will have to be satisfied at some time in the future. Satisfaction of the
liability may be by payment of money, transfer of other assets, or the performance of a service.
Example: Company A bought $10,000 worth of widgets from Company B. Company B says that
Company A has until the end of the month to pay the $10,000. Company A has a $10,000 liability to
Company B.
Example: Amy sends $25 to Reader's Digest for a year's magazine subscription. Reader's Digest
then has a liability to Amy to send her a year's worth of magazines.
c. Credit
A credit is an entry on the right side of an account. It represents an increase in a liability, owner's
equity, or income and represents a decrease in an asset.
d. Debit
A debit is an entry on the left side of an account. It represents an increase in an asset or expense
and represents a decrease in a liability or owner's equity.
e. Posting
Information about transactions is collected in journals. Typically a business will have a Cash
Receipts Journal, a Cash Disbursements Journal, and a General Journal (where transactions
affecting accounts other than cash are accumulated). Posting is the process of transferring the
debits and credits recorded in the journals to individual accounts.
Example: At the end of the week the Cash Disbursements Journal is totaled. Checks totaling
$3,694.32 were written that week. $2,075.00 of those checks were written to pay bills (Accounts
Payable) and $1,000 was written in salary checks to employees. The remaining $619.32 was used
to purchase office supplies. The bookkeeper would post a debit of $2,075.00 to Accounts Payable, a
debit of $1,000 to Salary Expense, a debit of $619.32 to Office Supplies Expense, and a credit to
Checking Account of $2,075.00.
f. Trial balance
A trial balance is a listing of all the business's accounts with their balance at a specific date and
time. It is used as a check to determine that both sides of each double-entry transaction have been
posted. Asset and expense accounts (accounts that normally have a debit balance) are added
together in one column. Liabilities, owner's equity, and income accounts (accounts that normally
have a credit balance) are added together in another column. If the bookkeeper has added and
subtracted properly, the two columns should have equal totals.
g. Voucher
A voucher is basically a "permission slip" authorizing a transaction. It details the transaction
approved and is signed by one or more company officials with authority to approve the transaction.
At a minimum the voucher would show what item(s) may be purchased and at what price per unit.
h. Invoice
An invoice is an itemized bill with detailed list of goods shipped or services provided, each with their
individual costs. For example, the invoice might show that a company bought 10 trashcans @
$15.00 a piece and 2 packages of trash can liners at $7.00.
i. Interest
Interest is a charge made for the use of money. It is usually expressed in an annual percentage rate
(APR). One may pay interest (such as on a mortgage loan) or earn interest (such as from money
deposited in a savings account).
a. How much time do you spend each week at your job as church treasurer?
b. What do you do with the money collected in the offering plates?
c. How do you keep track of who contributed how much money?
d. What money is sent to the conference?
e. What money is kept in our local church?
f. Are your records ever reviewed by an accountant? How often?
g. How do you report the church finances to the church board?
h. How do you report the church finances to the conference?
Make arrangements with your church treasurer well ahead of time so that she has plenty of time to
work you into her schedule. Be flexible in scheduling your guest's time with your club. It may be
necessary to have "honor time" earlier or later in the meeting to accommodate her schedule.
Remember (and remind your Pathfinders) that she is doing you a favor by taking time out of her
schedule to help you with this requirement. You may wish to provide the questions to her in advance
so she doesn't have to come up with the answers on the spot. Write the questions down on index
cards and pass them out to your Pathfinders so that they can take turns asking them.