2. Bookkeeping transactions Flashcards
What’s a double entry
Every transaction results n a debit or credit
Whats an example of a transaction resulting in a debit or credit
A business buy good for resale
DR: Purchases
CR: Bank
What’s the formula for cost of goods sold
Beginning inventory + Purchases _ Ending inventory
What’s the difference of a business being or not being VAT registered
If it is then you will account for VAT on the Asset or Liability column
If it is not then it will not account for in the column
Whats a keyword in a question to let you know if yo should account for VAT
‘XYZ company is or is VAT registered’
If your company is VAT registered is it an Asset or Liability
Liability, why because you ow HMRC VAT
What is each transaction entered into
Book of prime entry
Cash Sale
Cash book - debit side
Credit sales
Sales day book
Sales return
Sales return day book
Receipts from credit customers
Cash book - debit side
Cash Purchases
Cash book - credit side
Credit Purchase
Purchase day book
Purchase return
Purchase return day book
Payment to credit suppliers
Cash book - credit sales
Wages and Salaries
Journal
Other cash payments
Petty cash book
What’s the accounting equation for debits and credits
Debits = Credits
What’s the various accounting equations for Assets Liabilities and Capital
Assets = Liabilities + Capital
Assets - Liabilities = Capital
Liabilities = Assets - Capital
What’s the accounting equation for Capital
Capital = Opening Capital + New capital introduced + Profit for the year - Drawings
What’s Output tax
A tax charged on sales and is payable to the HMRC authorities
What’s Input tax
A tax charged on purchases and is recoverable by a tax authority (HMRC) if the business is VAT registered
Is the VAT control; account a debit or credit
What’s the formula to calculate how much HMRC are owed at the end of the period
(Sales + Purchases) - Purchase returns - Sales return - Bank
A credit balance on a general ledger indicates either a…
liability, capital or income
