Chp 9: Double Entry And The General Ledger

Question 1

What is double-entry bookkeeping?

Answer 1

Double entry bookkeeping is a systematic method of recording an enterprise’s transactions in a book called the (general) ledger.

Question 2

What is the main function of the double entry system?

Answer 2

The main purposes of this system are to provide a means of ascertaining the total amount of each type of income and expenditure for a given accounting period, as well as the value of the assets owned by the business (e.g. cash) and how much is owed to and by the business at any point in time.

Question 3

What are the five elements of accounts?

Answer 3

1. Asset
2. Liability
3. Capital
4. Income
5. Expense

Question 4

To balance accounts using double entry how do you balance assets between credit and debit?

Answer 4

Increasing : asset
Decreasing : credit

Question 5

To balance accounts using double entry how do you balance liability between credit and debit?

Answer 5

Increasing : credit
Decreasing: debit

Question 6

To balance accounts using double entry how do you balance capital between credit and debit?

Answer 6

Increasing : credit
Decreasing: debit

Question 7

To balance accounts using double entry how do you balance income between credit and debit?

Answer 7

Increasing : credit
Decreasing: debit

Question 8

To balance accounts using double entry how do you balance expense between credit and debit?

Answer 8

Increasing : debit
Decreasing: credit

Question 9

What is posting?

Answer 9

term to describe updating the accounting records with transactions

Question 10

What is a cash account?

Answer 10

When cash is received, it is entered on the debit side of cash account and when it is paid out it is on the credit side

Question 11

What is balance carried down (c/d)?

Answer 11

is the balance carried down as the closing balance of a ledger pushed to the next accounting period.

Question 12

What is a balance brought down (b/d)?

Answer 12

is the balance brought down as opening balance of a ledger pulled from the previous accounting period

Question 13

What is a trial balance?

Answer 13

A trial balance is a list of the balances in the ledger at the end of an accounting period, divided between those accounts with debit balances and those with credit balances.

Question 14

What are cash discounts?

Answer 14

Cash discount is a reduction given by the supplier of goods to a buyer if the latter pays for them within a period stipulated by the seller at the time of sale.