Double Entry Bookkeeping Flashcards
What happens when you get a cash receipt?
Debit cash account, credit another account
What happens when you get a cash payment?
Credit cash account, debit another account
What happens when you get a purchase invoice?
Credit accounts payable, debit another account
What happens when you get a sales invoice?
Debit accounts receivable, credit another account
What are the five accounting adjustments?
1) Closing inventories
2) Accruals
3) Prepayments
4) Depreciation
5) Bad and doubtful debts
How is closing inventories adjusted?
Debit COS, credit inventories
How is accruals adjusted?
Debit estimated cost, credit estimated accrual
How are prepayments adjusted for?
Credit amount paid in advance, debit prepayment account
How are bad and doubtful debts accounted for?
Debit bad and doubtful debts account, credit addition to doubtful debts provision
What is the trial balance?
The balances on the individual accounts recorded within the general ledger may be summarised in a trial balance
What must occur within a trial balance?
Within the trial balance the total of the debit balances is equal to the total of the credit balances
What is the income statement?
Profit/loss account
What is the balance sheet/statement of financial position?
Discloses assets (Debit balances) and liabilities, shareholders capital (credit balances) and gains (credits) or losses (debits)
What is a cash discount?
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
What happens when there is a discount allowed?
Debit discount allowed account, credit customers account
