ITBK

Question 1

consider the purpose of accounting

Answer 1

The key purpose of accounting is to record and classify business transactions in the correct way.

Question 2

Businesses will undertake many different types of

Answer 2

financial transactions every single day.

Question 3

All of these needs to be recorded the various

Answer 3

different types of business documents in order to be entered into the accounting system, or the books of a business.

Question 4

Some examples of the different types of transaction that you’ll need to be familiar with

Answer 4

credit sales, cash, sales, credit purchases, and cash purchases. expenses that are paid either in cash or by debit card,
paying cash into the bank, and withdrawing cash from the bank,
and also something called owner’s drawings

Question 5

Firstly we have cash credit sales.

Answer 5

People and businesses pay for goods and services either in cash or by credit. A cash transaction is completed immediately as the money is handed by the buyer to the seller and the buyer has immediate access to the goods. Many retail businesses operate on a cash basis.

Question 6

credit sales that we’ll go through throughout the course require a bit more knowledge. These

Answer 6

are not paid for immediately. The goods are sold, and a promise to pay at a later date is made by the buyer. selling goods in this way can be risky. We allow the goods to be taken away, but we haven’t received payment. Therefore before we let the goods go, we have to be confident that the payment is going to be received at that later date. As we’re offering the buyer credit to take the goods home now.

Question 7

Next we have cash and credit purchases.

Answer 7

These work in exactly the same way as sales. But this time is asked who is buying the goods or services rather than being the seller. We can make the purchase with cash right now or we can buy on credit. If this was the case that we are promising to pay the supplier at a later date.

Question 8

paid either in cash or from the bank. When we incur expenses

Answer 8

When we incur expenses
as a business, we have to pay for these. These might be wages, telephone bills or rent. We’ll also need to pay for these obviously, we could do this either in cash or electronically via bank accounts.

Question 9

Next we have paying cash into the bank.

Answer 9

As a business when we receive cash, we’ll need to regularly pay this into the bank account to keep it safe and secure.

Question 10

alternatively, we can take money out from the bank.

Answer 10

withdrawing cash from the bank can be done at any
time. Whenever we need that money for our business needs

Question 11

Lastly, we have owners drawings.

Answer 11

This is where the owner of the business withdraws some money out of the company. As we’ve just seen, this time is not for a business need. It will instead be for the own personal or private use of the owner. These are called drawings.

Question 12

step two

Answer 12

we have a business document being produced

Question 13

STEP 1

Answer 13

buisness transaction

Question 14

step 3

Answer 14

books of prime entry

Question 15

books of prime entry can also be called

Answer 15

daybooks

Question 16

when the same thing as that for the transactions which have been recorded in the books of prime entry and now transferred into what we call

Answer 16

ledger accounts. ledger accounts

Question 17

step 4

Answer 17

ledger accounts

Question 18

step 5

Answer 18

trial balance

Question 19

trial balance

Answer 19

This is a list of all of our ledger accounts in our accounting system.