Double-entry bookkeeping; first principles (2)

Question 1

Debit entry (DEFINITION)

Answer 1

The account which GAINS value, or records an asset, or an expense

Question 2

Credit entry (DEFINITION)

Answer 2

The account which GIVES value, or records a liability, or an income item

Question 3

Capital introduced

Answer 3

Debit bank account

Credit capital account

Question 4

Non-current assets (DEFINITION)

Answer 4

Items purchased by a business for use on a long-term basis

Question 5

Capital expenditure (DEFINITION)

Answer 5

When a business purchases non-current assets

Question 6

Purchase of a non-current asset

Answer 6

Debit non-current asset

Credit bank account

Question 7

Revenue expenditure (DEFINITION)

Answer 7

Day-to-day expenses of running a business

Question 8

Payment of an expense

Answer 8

Debit expense account

Credit bank account

Question 9

Receipt of income

Answer 9

Debit bank account

Credit income account

Question 10

Owner’s drawings

Answer 10

Debit drawings account

Credit bank account

Question 11

Loan received

Answer 11

Debit bank account

Credit loan account

Question 12

Loan repayment

Answer 12

Debit loan account

Credit bank account

Question 13

Disposal (sale) of a non-current asset

Answer 13

Debit bank account

Credit non-current asset account

Question 14

Withdrawal of cash from the bank for use in the business

Answer 14

Debit cash account

Credit bank account

Question 15

Payment of cash into the bank

Answer 15

Debit bank account

Credit cash account