Basic Principles Of Accounting

Question 1

What is the double entry bookkeeping based upon

Answer 1

The dual effect..the separate entity principle …the accounting equation

Question 2

What is the dual effect principle

Answer 2

States that every trans have two financial effects

Question 3

Eg of the dual effect principle

Answer 3

You buy a car for 2k, you lose money but gain asset

Question 4

What is the separate entity principle?

Answer 4

This states that the owner of the business is a complete separate entity from the business itself

Question 5

What does the money that the owners pays into the business have to be accounted for?

Answer 5

As an amount the business owes back to the owner

Question 6

What is drawings

Answer 6

Money the owner takes out the business

Question 7

what should drawings be treated as regarding separate entity

Answer 7

A reduction of the initial capital that is owed back to the owner

Question 8

What is it called if the owners pays into the business

Answer 8

Special liability known as capitsl