2: Recording Transactions

Question 1

Elements of a Transaction?

Answer 1

The Item Exchanged (If none - no transaction)

A form of Settlement (Cash, IOU or Capital)

Question 2

What is Double Entry Bookkeeping?

Answer 2

A system where each transaction is entered twice - once on the debit side and one on the credit side

Question 3

What are Accounts?

Answer 3

Part of double entry records, containing details of transactions for a specific item

Question 4

Principles of Double Entry Bookkeeping?

Answer 4

A Form of settlement given is always a credit.

A Form of settlement received is always a debit.

The entry for the Item exchanged is always the opposite to the entry for the Form of settlement.

Question 5

The Balance?

Answer 5

The difference between the totals of the debits and the total of the credits entered in the account

Question 6

Accounting Equations

Answer 6

Capital = Assets - Liabilities

Assets + Expenses = Liabilities + Capital + Income

Question 7

Creditor/Trade Payables Ledger Contain

Answer 7

Individual personal accounts of suppliers who sell to our business on credit terms

Question 8

Debtor/Trade Receivables Ledger Contain

Answer 8

Individual personal accounts of customers who buy on credit terms