Double entry accounting

Question 1

Total income in greater than total expenses

Answer 1

profit

Question 2

Present economic resources controlled by the entity

Answer 2

Asset

Question 3

Life of the business is divided into artificial periods

Answer 3

Accounting period concept

Question 4

Costs a business incurs to generate income

Answer 4

expenses

Question 5

The expanded accounting equation

Answer 5

Assets = Liabilities + Owners capital + Income - Expenses - Drawings

Question 6

amounts received/receivable from selling G/S

Answer 6

Revenue

Question 7

Business will remain in operation for the foreseeable future

Answer 7

Going concern principle

Question 8

Present obligation of the entity to transfer an economic resource due to past events

Answer 8

Liability

Question 9

An evidence of a transaction

Answer 9

Source document

Question 10

Total expenses exceed total income

Answer 10

Loss

Question 11

What does ALOIE stand for?

Answer 11

Assest - Liabilities - Equity - Income - Expenses

Question 12

What side of the T account are credits found?

Answer 12

Right side (credit side)

Question 13

Formal name for the “T” account

Answer 13

Ledger Account

Question 14

Assets increases…

Answer 14

Debits

Question 15

Liabilities increases…

Answer 15

Credit

Question 16

Owners equity increases…

Answer 16

Credit

Question 17

Income Increases…

Answer 17

Credit

Question 18

Expenses Increases…

Answer 18

Debit

Question 19

Drawings Increases…

Answer 19

Debit

Question 20

Dividends Increases…

Answer 20

Debit

Question 21

What is the Normal balance side?

Answer 21

Increasing side of the T account (debit or credit)

Question 22

Transaction effect of paying a creditor..

Answer 22

Debit - Decrease liability (accounts payable)

Credit - Decrease asset (cash)

Question 23

Transaction effect of owner withdrawing money from business bank account for personal use..

Answer 23

Debit - Decrease equity (capital)

Credit - Decrease asset (cash)

Question 24

Transaction effect of purchasing office supplies on credit…

Answer 24

Debit - Increase asset (office supplies)

Credit - Increase Liability (accounts payable)

Question 25

Transaction effect of debtor pays money owing by cheque

Answer 25

Debit - Increase asset (cash)

Credit - Decrease asset (accounts receivable)

Question 26

What is Cash basis accounting?

Answer 26

Records transactions and events at the time of payment of cash e.ge no payables or receivables

Question 27

What is Accrual Basis Accounting?

Answer 27

The effects of transaction are recognised when they occur, not when cash is received or payed.

Question 28

What is the Accounting Entity concept?

Answer 28

Identify clearly the boundaries of the entity being accounted for. Personal transactions of owner must remain seperate.

Question 29

What is the Cost principle?

Answer 29

States that all assets are initially recorded in the accounts at their purchase price or cost.

Question 30

What are the fundamental Qualitative characteristics of accounting information?

Answer 30

Relevance - capable of making a difference in decisions by users
Faithful representation - complete, neutral, free from errors

Question 31

What are enhancing qualitative characteristics of accounting information?

Answer 31

Comparability
Verifiability
Timeliness
Understandability