3- Ledger Accounting Flashcards

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1
Q

What sides are debit & credit on in a ledger account?

A

Left side is debit & right side is credit.

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2
Q

What is the golden rule for making entries in ledger accounts?

A

Every debit entry must have an equal & opposite credit entry.

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3
Q

What does the mnemonic ‘DEAD/CLIC’ mean?

A

Debit increases:
- expenses
- assets
- drawings

Credit increases:
- liabilities
- income
- capital

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4
Q

Cash purchase

A

Occurs when goods are bought & the customer pays immediately using cash, debit card, credit card or cheques. A receipt is issued for the amount of cash paid.

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5
Q

Credit purchase

A

Occurs when goods are bought & the customer doesn’t have to pay immediately but can pay after a specified number of days. An invoice is then issued to request that payment is made.

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6
Q

Cash sale

A

Occurs when goods are sold o the customer pays immediately with cash, debit card, credit card or cheques. A receipt is issued for the amount of cash received.

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7
Q

Explain the procedure for balancing a ledger account

A
  1. Total both the debit & credit side of the ledger account & make a note of each total
  2. Insert the higher of the two totals as the total on both sides of the ledger account
  3. On the side with smaller total insert the figure needed to make this column add up to the total. Call this figure the balance carried down (bal c/d)
  4. On the opposite side of the ledger account, below the total insert this same figure & call it the balance brought down (bal b/d)
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8
Q

Trial balance

A

A list showing the balance brought down on each ledger account. It is a check to ensure that the total debits equal the total credits, & therefore the totals of the trial balance columns should balance. However, it does not confirm that the account debited or credited is correct.

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9
Q

Digital bookkeeping

A

Storing your accounting records online, either on a local server or in the cloud.

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10
Q

CSV file

A

A comma separated values (CSV) file is a plain text file that contains a list of data. A CSV file is used to exchange data between different applications.

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11
Q

What are the benefits of using digital bookkeeping systems?

A
  • Simple data entry & efficiency
  • Automatic generation of reports
  • Automation of tasks
  • Reduction of errors
  • Integration with other systems
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12
Q

Recurring entries

A

A journal entry that is recorded in every accounting period.

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13
Q

What are the drawbacks of using a digital bookkeeping system?

A
  • Cost
  • Implementation & support
  • Potential errors
  • Specialised needs
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