4: Ledger accounting and double entry Flashcards
What are ledgers?
Ledger accounts record and analyse all the individual transactions of a business. Each transaction will be dated and recorded in chronological order using double entry.
What is the nominal ledger?
The nominal ledger groups together all the individual ledger (T) accounts
What is the duality concept?
Each transaction has an equal but opposite effect - Double entry bookkeeping.
What is the double entry acronym
DEAD CLIC
Debts increase= Expenses, assets, drawings
Credits increase = Liabilities, income, capital
Conversely, a debit will reduce liabilities, income and capital and a credit will reduce expenses, assets, drawings
What is gross vs net VAT and how is each worked out
Gross = Including VAT
Net = Excluding VAT
Gross = Net x1.2
Net = Gross/1.2