2. Bookkeeping transactions

Question 1

What’s a double entry

Answer 1

Every transaction results n a debit or credit

Question 2

Whats an example of a transaction resulting in a debit or credit

Answer 2

A business buy good for resale
DR: Purchases
CR: Bank

Question 3

What’s the formula for cost of goods sold

Answer 3

Beginning inventory + Purchases _ Ending inventory

Question 4

What’s the difference of a business being or not being VAT registered

Answer 4

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

Question 5

Whats a keyword in a question to let you know if yo should account for VAT

Answer 5

‘XYZ company is or is VAT registered’

Question 6

If your company is VAT registered is it an Asset or Liability

Answer 6

Liability, why because you ow HMRC VAT

Question 7

What is each transaction entered into

Answer 7

Book of prime entry

Question 8

Cash Sale

Answer 8

Cash book - debit side

Question 9

Credit sales

Answer 9

Sales day book

Question 10

Sales return

Answer 10

Sales return day book

Question 11

Receipts from credit customers

Answer 11

Cash book - debit side

Question 12

Cash Purchases

Answer 12

Cash book - credit side

Question 13

Credit Purchase

Answer 13

Purchase day book

Question 14

Purchase return

Answer 14

Purchase return day book

Question 15

Payment to credit suppliers

Answer 15

Cash book - credit sales

Question 16

Wages and Salaries

Answer 16

Journal

Question 17

Other cash payments

Answer 17

Petty cash book

Question 18

What’s the accounting equation for debits and credits

Answer 18

Debits = Credits

Question 19

What’s the various accounting equations for Assets Liabilities and Capital

Answer 19

Assets = Liabilities + Capital
Assets - Liabilities = Capital
Liabilities = Assets - Capital

Question 20

What’s the accounting equation for Capital

Answer 20

Capital = Opening Capital + New capital introduced + Profit for the year - Drawings

Question 21

What’s Output tax

Answer 21

A tax charged on sales and is payable to the HMRC authorities

Question 22

What’s Input tax

Answer 22

A tax charged on purchases and is recoverable by a tax authority (HMRC) if the business is VAT registered

Question 23

Is the VAT control; account a debit or credit

Question 24

What’s the formula to calculate how much HMRC are owed at the end of the period

Answer 24

(Sales + Purchases) - Purchase returns - Sales return - Bank

Question 25

A credit balance on a general ledger indicates either a…

Answer 25

liability, capital or income