Double Entry and Ledger Accounts

Question 1

What is the Nominal Ledger?

Answer 1

Each item in the Statement of Financial Position and Statement of Profit and Loss will have its own ‘T’ account. These accounts are collected in the Nominal or General Ledger.

Question 2

What is the method called that records transactions in the Nominal Ledger?

Answer 2

Double Entry.

Question 3

What is the Duel Effect?

Answer 3

Wherever there is a debit there will be a credit.

Question 4

How do you increase an account?

Answer 4

DEAD CLIC
Debit: Expenses, Assets, Drawings/Debtors
Credit: Liabilities, Income, Capital/Creditors

Question 5

How do you decrease an account?

Answer 5

DLIC CEAD
Debit: Liabilities, Income, Capital/Creditors
Credit: Expenses, Assets, Drawings/Debtors

Question 6

What are the two types of memorandum ledgers kept by the business?

Answer 6

Receivables Ledger - Shows how much is owed by each individual customer.

Payables Ledger - Shows how much is owed to each individual supplier.

Question 7

What is the Trial Balance?

Answer 7

The trial balance consists of a list of the balances brought down on each ledger account, separated into debits and credits. Debits should equal credits on the trial balance.

Question 8

What is a Profit and Loss Ledger Account?

Answer 8

It identifies the the ledger accounts that go onto the profit and loss.