4: Ledger accounting and double entry

Question 1

What are ledgers?

Answer 1

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.

Question 2

What is the nominal ledger?

Answer 2

The nominal ledger groups together all the individual ledger (T) accounts

Question 3

What is the duality concept?

Answer 3

Each transaction has an equal but opposite effect - Double entry bookkeeping.

Question 4

What is the double entry acronym

Answer 4

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

Question 5

What is gross vs net VAT and how is each worked out

Answer 5

Gross = Including VAT
Net = Excluding VAT

Gross = Net x1.2
Net = Gross/1.2