Chap 4 Concept of Double entry Flashcards Preview

POA sec 3 > Chap 4 Concept of Double entry > Flashcards

Flashcards in Chap 4 Concept of Double entry Deck (14)
Loading flashcards...
1
Q

How does a business record its business transactions?

A

Through a ledger account, and a business may have many ledger accounts

2
Q

A list of all the ledger accounts used by a business is known as

A

The Chart of accounts

3
Q

What is the format of the ledger accounts

A
Columnar format (computerised)
T-format (manual)
4
Q

What are columns found in the columnar ledger?

A
Date
Particulars
Debit
Credit
Balance
5
Q

What is unique about the design of the T-format ledger?

A

It has the shape of capital T
The account has 2 sides
Left side is debit
Right side is credit

6
Q

What are the double entry recording rules?

A

Each business transaction will have at least one debit entry to one account and at least one credit entry to another account
The total debit value must always equal the total credit entry for each transaction

7
Q

An increase/decrease in an asset is

A

debit/credit

8
Q

An increase/decrease in an liability is

A

credit/debit

9
Q

An increase/decrease in an equity is

A

credit/debit

10
Q

An increase/decrease in an income is

A

credit/debit

11
Q

An increase/decrease in an expense is

A

debit/credit

12
Q

A cash contribution from an owner in the cash in hand account and Capital account is considerded as

A

Debit increase in Cash in hand account

Credit increase in Capital account

13
Q

Cash obtained through borrwing in the cash in hand account and Bank Loan account is considered as

A

Debit increase in Cash in hand account

Credit increase in Bank Loan account

14
Q

A cash purchase of goods in the inventory account and Cash in Hand account is considered as

A

Debit increase in Inventory account

Credit decrease in Cash in hand account