Chapter 1 - The Accounting System Flashcards
Learn the accounting system and how it all works.
The Five Stage Accounting System
- ) Financial Transactions
- ) Financial Documents
- ) Books of Prime Entry
- ) Ledger Accounts
- ) Trial Balance
What are the 3 types of ledger accounts?
- ) Sales Ledger
- ) Purchases Ledger
- ) General Ledger
What are control accounts?
‘Total’ accounts which summarise a number of other accounts.
What are ledger accounts?
A large book in which each business transaction is entered into individual accounts.
What is the trial balance?
It brings together the balances of all the ledger accounts in the general ledger. It sets it out in 2 columns: Debit and Credit.
What is the statement of profit or loss?
Income - Expenses = Profit
What is the formula for the statement of Financial Position?
Assets - Liabilities = Capital
What is a trade receivable?
Debtors - Someone who owes YOU money.
What is a Trade payable?
Creditors - a SUPPLIER you owe money to.
What is a statement of profit or loss?
A financial statement that calculates profit or loss made by a business.
What is a statement of financial position?
A financial statement that shows the value of the owner’s investment.
