Accounting part 2

Question 1

What is the accounting equation?

Answer 1

Assets = Owner’s Equity + Liabilities

Question 2

What account is always involved in a double entry?

Answer 2

Bank.

Question 3

What are the 6 stages of the accounting cycle?

Answer 3

1. Transaction takes place
2. Document is printed to record the transaction (source documents)
3. The documents are summarised into journals
4. The journals are totalled and posted to the ledger
5. Trial balance
6. Financial statements

Question 4

What are the 4 types of source documents used when a transaction is made?

Answer 4

1. Receipt
2. Deposit slip
3. Cash register tape (CRT)
4. Cash invoice

Question 5

What is a cheque counterfoil?

Answer 5

A copy of the original cheque that is a record of money paid out by the business. It is a summary of the details on the original cheque.

Question 6

What is current income?

Answer 6

Income earned by performing a service.

Question 7

What is rent income?

Answer 7

If a business owns property, they can rent it out a portion in order to earn rent income.