Appendix A Reading Notes Flashcards

1
Q

What is an account?

A

A section of double entry bookkeeping system that deals with one particular asset, claim, expense or revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Where are individual accounts recorded?

A

In accounts / journal entries

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are examples of accounts?

A

Equity
Cash
PPE
Sales revenue
Accounts payable
Borrowings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Debits on the…
Credits on the…

A

Debits on the left
Credits on the right

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is double entry bookkeeping?

A

Each transaction impacts two or more accounts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are ‘trading transactions’?

A

Involving revenue and expenses (sales & purchases

Transactions involving a trade of goods/services. These transactions impact the income statement.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is the accounting equation?

A

Assets = Liabilities + Equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the 3 debit accounts?

A

Dividends, Expenses, Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the 3 credit accounts?

A

Liabilities, Equity, Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Are assets & expenses closely linked?

If so, why?

A

Yes.

This is because assets transform into expenses as they’re used up

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Why do businesses summarise their individual accounts periodically?

A
  • To see at a glance how much is in each account
  • to check the accuracy of the bookkeeping
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is c/d

A

Carried down amount

Closing balance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is b/d?

A

Brought down amount

Opening balance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a trial balance?

A

A totalled list of the balances on each of the accounts in a double entry bookkeeping system

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is trial balance order?

A

Assets, Liabilities, Equity, Revenue, Expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What must happen to a trial balance before financial statements are produced?

A

Adjustments

17
Q

What is the purpose of the income statement?

A

Shows the company’s profit & loss over a period

Shows the company’s financial performance

18
Q

What is the profit/loss at the end of a period referred to as?

A

Net Income

Accumulated deficit if negative
Retained earnings if positive

19
Q

Where are retained earnings put at the end of an accounting period?

A

Owners Equity account

20
Q

What does the balance sheet portray?

A

non-current/current assets
non-current/current liabilities
equity

21
Q

What are the 4 financial statements?

A

SOFP
SOCF
P&L
SOCE

22
Q

What is the flow of financial statements?

A

Income statement
Statement of stockholder’s equity
Balance sheet
Statement of cash flows

23
Q

What is a ledger?

A

The book in which the accounts are traditionally kept

24
Q

What are the various divisions in ledgers?

A

The cash book
The sales ledger
The purchases ledger
The nominal ledger
The general ledger

25
Q

Deferrals = cash first/last?

A

Deferrals = Cash first

Unearned revenue & prepaid expenses

26
Q

Accruals = cash first/last?

A

Accruals = cash later

(Accrued expenses & accrued revenue)