Class 2: Double Entry System of Accounting Flashcards
Who invented Double Entry System?
Luca Pacioli, Italian, 1494
List the advantages of Double Entry System?
Control
Complete records
Aids to final accounts
What is credit and debit?
Credit is giving debit is receiving
What is cashbook?
This is the book used to record cash/cheque transactions
Cashbooks add the dual function of . . . .
Ledger account and a subsidiary book
What is a cash account?
It is an account used for recording cash in hand, all cash receipts are credited while all cash payments are debited to the cash accounts
What is bank account?
The amount of money paid into the bank and withdrawn from the bank
What is a two column cash book?
It is a book divided into cash account and bank
List 3 uses of two column cash book
It is used in obtaining the balance sheets at a glance
It performs the function of a subsidiary book as it records transaction at the initial stage
It reduces the burden of the ledger
What is Contra?
Is a Latin word meaning that cash has bee withdrawn from the office and deposited in the bank
What are the reasons for dishonoring a cheque
Alteration on cheque
Insufficient funds in the account
Irregular signature
Lack of Confirmation
Invalid identification of Payee
What is Posting?
It is process of entering the items in one book as a means of entering the same items into the account of another so as to complete the double entry system
What is a Journal?
A Journal is a book of prime entry used in recording daily transactions
What are some of the sub-divisions of journal?
Sales daybook
Purchases daybook
The return outwards journal
The return inwards journal
Cash Journal
General Journal
List the features of a journal
it is a subsidiary book
it has a narration of all business transaction
it has folio, particulars, credit and debit
The items are later posted to the ledger
It shows the accounts to be debited and credited
