lec 2 sum Flashcards
what is doule entry bookeepoing
systematic method
recording transactions
in a general ledger
ledger is divided into sections called
accoutns
transactions are recorded in
accoutns
each account is started on
a new page
each transaction is entered how many times and influences how many accounts
2
if an transaction is entered once in an account on a debit side what happens
entered into the credit side of another account
if company pays for something immediatley it is an
expense
when company doesnt pay for something immediatley it is a
liablity
what are the 5 account classifications
Assets
Liability
Equity
- balance sheet
Income
Expenses
- profit and loss account
debit side is not always an and credit side is not always an
increase
decrease
1 side teh value of teh account will increase therfore on the other side the value
decreases
whats the acronymn
all elephants
assets , expenses
like ice cream
liability , income , capital/equity
what accounts does debit side increase
assets and expenses
what account does credit side increase
liability , income , capital/expenses
tax account si what type of account
expense
tax accrual is what type of account
liablity
when doing bookeeping/recording accoutns what are the two steps
identify main account
identify the settlement
immediate settlement =
bank/cash account
latter settlemtn
payable/creditor (L)
recievable/debtor (A)
If company is paying back a liabiltiy what side will it go on
debit side as liablity s reducing
if paid something on credit where do we put the new payment
on the opposite side to show its been paid
and on teh credit side of cash as asset of cash is decreasing
if money is withdrawn by owner what is the effect
decrease in credit as capital is reducing
fixtures and fitting are what type
asset
purchases are
expense
spendin to buy stationery si an
fixed asset
expenses
Depreciation
discounts allowable
standard d2d expenss too
liablities
accruals
deferred tax
income
rev
interest
income from rent
capital
retained earnings
drawings
stocks
if debitor pays back money how do we record it
write the payback on teh opposite side as income increased - to show it has cancelled out
then record in the cash as debit side because asset (Cash) has increased
if someone makes a sale but pays half by credit and half by cash how do we record this
sales - increase credit as income is increasing - split in half 300 by cash 300 by creditor
keep on the same side
if paying someone back because theyve returned something how do we record this
debit revenue
credit cash
we’re gonna assume paying someone back after a transaction is an
expense
but we will check
