double entry book keeping

Question 1

what is DEBK?

Answer 1

the system in which accountants use to record financial data
recognises that every transaction has a two fold effect

Question 2

what is meant by a two fold effect?

Answer 2

each party is affected

Question 3

what are three important terms for DEBK?

Answer 3

• liabilities
• capital
• assets

Question 4

what are assets?

Answer 4

possessions/resources owned and controlled by the company, can be tangible and intangible (rights)

Question 5

what is a liability?

Answer 5

amount of money that the entity owe to other parties

Question 6

what are examples of liabilties?

Answer 6

loans, overdraft, creditors (trade payable)

Question 7

what is capital?

Answer 7

amount owners invested into an entity, amount of money entity owes to the owner

Question 8

what are the characteristics of assets?

Answer 8

measurable in monetary terms
probable future benefit
own it out right
exclusive rights to control

Question 9

what is non current asset?

Answer 9

asset which brings economic benefit for more than one accounting period

Question 10

what is a current asset?

Answer 10

asset in which benefit will be used up in one accounting period

Question 11

what is a non current liability?

Answer 11

amounts due to a third party not liable for repayment within one accounting period

Question 12

what is a current liability?

Answer 12

amounts due to a third party due for repayment within one accounting period

Question 13

what is the basis for the DEBK?

Answer 13

the accounting equation

Question 14

what is the accounting equation/

Answer 14

assets + expenses = liabilities + revenue +liabilities

Question 15

if assets increase where do you put the amount in a t account?

Answer 15

in the debit side

Question 16

if assets decrease where do you put the amount?

Answer 16

credit

Question 17

if liabilities increase where do you put amount in t account?

Answer 17

credit

Question 18

what is meant by balance brought down?

Answer 18

balance kept in account for next account period

Question 19

what is meant by balance carried down?

Answer 19

difference between credit and debit

amount is moved aver the there lowest side

Question 20

what do you do if there is a sale on credit?

Answer 20

open up a trade receivables

sales is credited and TR is debited

Question 21

why do you open a TR account?

Answer 21

for sales on credit

Question 22

what do you do if you purchase on credit?

Answer 22

open up a trade payables (creditor)

debit the purchase, credit TP, the credit bank when paid and debit TP

Question 23

how do you do a sales return?

Answer 23

reverse the sale transaction

sales credit and bank debit to bank credit and sales debit

Question 24

how do you do a discount?

Answer 24

debit trade payables with the discount
credit the discount account
credit your bank with the amount minus what is discounted