Chapter 1 intro to Bookkeeping and Accounts Flashcards
what is bookkeeping?
Bookkeeping is the art of recording financial transactions for a business
what is the key difference between financial and management accounting?
financial accounting is aimed at providing info to parties outside the organization but management accounting is aimed at providing info to managers inside the organization to help make decisions
what is the flow chart?
Financial transactions, Financial documents, Books of prime entry, ledger accounts, Trial balance
how are financial transactions recorded?
hand-done or computerized
Name the books of prime entry?
Sales daybook, Purchase daybook, Returns and Allowances book and Cash book
Define sale, its category, what it’s considered as, and its trial balance?
delivery or exchange of a service or product for a payment from another party. Its category is a cash sale and credit sale. It’s considered as in the profit and loss accounts and trial balance is a credit balance.
Define purchase, its category, whats it considered, and its trial balance
Purchase is the ordering and buying of items with the intention to resell them to profit or gain.Its category is Cash and credit purchase. It’s considered in profit and loss and trial balance is debit balance.
Define direct expenses, category and trial balance?
Expeneses incurred by the business which relates directly with production of goods and the delivery of service reaching its customers.Its category is profit and loss accounts and trial balance is debit balance
Define Overheads,an eg, category and trial balance?
other expenses incurred by the business in carrying out its operation e.g office rent. category is profit and loss accounts an have a debit balance.
Define Non current asset, aka, eg, catergory and trial balance?
Item owned by the business that can not be converted in to cash easily aka fixed assets eg motor vechiles, category is balance sheet and is adebit balance.
Define current asset, aka, eg, category and trial balance?
Item owned by the business that can be converted into cash easily, aka liquid assets, eg cash. catergory balance sheet and debit balance.
Define trade recievables, aka, category and trial balance?
Money owed to the business by its customers, aka debtors, category balance sheet as current asset and debit balance.
Define Inventory , category and trial balance ?
Total value of goods owned by a business for resale by the end or begining or end of an accounting period, Category balance sheet as current asset and debit balance.
Define Current Liabilities, eg, category and trial balance?
Obligations of the business that are to be settled with its current assets, eg trade payables,category balance sheet and credit balance.
Define Loans, category and trial balance?
Type of debt, business borrows money from an indivisual or orginazation usually at interest cost, category balance sheet as liabilites and credit balance.
Define trade payables, aka, category and trial balance?
Money owed by the business to its suppliers, aka creditors, catergory balance sheet as current liabilities and credit balance.
Define Capital , category and trial balance?
Investments into the business usually by owner to enable the business to operate financially, category balance sheet and credit balance.
Define Reserves, category, trial balance?
Surplus of income over expenses, category balance sheet and credit balance.
What is the Double-entry principle?
For every credit entry, there must be a corresponding debit entry
and vice versa
What are the 3 groups on the Debit side? The acronym?
Expenses, Assets, and Drawing
DEAD
What are the 3 groups on the credit side? The acronym?
Liabilities, Income & Capital
CLIC
commission received?
Income
Capital?
Capital
Miscellaneous expenses?
Expense
Bank?
Asset
Drawing?
Drawing
Accruals?
Liabilities
Sales?
Income
Rent?
Expenses
