Appendix A Reading Notes Flashcards
What is an account?
A section of double entry bookkeeping system that deals with one particular asset, claim, expense or revenue
Where are individual accounts recorded?
In accounts / journal entries
What are examples of accounts?
Equity
Cash
PPE
Sales revenue
Accounts payable
Borrowings
Debits on the…
Credits on the…
Debits on the left
Credits on the right
What is double entry bookkeeping?
Each transaction impacts two or more accounts
What are ‘trading transactions’?
Involving revenue and expenses (sales & purchases
Transactions involving a trade of goods/services. These transactions impact the income statement.
What is the accounting equation?
Assets = Liabilities + Equity
What are the 3 debit accounts?
Dividends, Expenses, Assets
What are the 3 credit accounts?
Liabilities, Equity, Revenue
Are assets & expenses closely linked?
If so, why?
Yes.
This is because assets transform into expenses as they’re used up
Why do businesses summarise their individual accounts periodically?
- To see at a glance how much is in each account
- to check the accuracy of the bookkeeping
What is c/d
Carried down amount
Closing balance
What is b/d?
Brought down amount
Opening balance
What is a trial balance?
A totalled list of the balances on each of the accounts in a double entry bookkeeping system
What is trial balance order?
Assets, Liabilities, Equity, Revenue, Expenses