Accounting Terms

Question 1

What is the accounting equation?

Answer 1

ASSETS - LIABILITIES = CAPITAL

Question 2

What is an asset?

Answer 2

something that a business owns

Question 3

What is the b/d?

Answer 3

the balance on ledger after all entries have been take into account
-shown BELOW total figure

Question 4

What is the c/d?

Answer 4

balancing figure
-shown ABOVE total figure

Question 5

What is capital?

Answer 5

amount owed by business to its owner as a separate entity

Question 6

What is capital expenditure?

Answer 6

money spent by business to purchase NCA

Question 7

What is capital income?

Answer 7

money received by business from sale of a NCA

Question 8

Examples of current assets

Answer 8

inventory, debtors, cash at bank and petty cash

Question 9

Examples of current liabilities

Answer 9

creditors and overdraft

Question 10

What is the general ledger?

Answer 10

collection of T accounts
-assets, liability, income, expenditure and capital accounts

Question 11

What are the 3 type of ledgers?

Answer 11

1. general
2. receivables
3. payables

Question 12

What is the receivables ledger?

Answer 12

individual ledger accounts for each trade customer
-single entry

Question 13

What is the payables ledger?

Answer 13

individual ledger accounts for each trade supplier
-single entry

Question 14

What is the SoFP?

Answer 14

particular point in time
1. assets and liabilities
2. net assets

Question 15

What is the SoPL?

Answer 15

over a period of time
-expenditure from income

Question 16

What are subsidiary ledgers?

Answer 16

sales and purchase ledger
-separate from general ledger

Question 17

What is trial balance?

Answer 17

list of all b/d Dr and Cr balances