Lecture 3

Question 1

how are accounting transactions recorded?

Answer 1

through double entry bookkeeping in journal entries/accounts

Question 2

what is an account?

Answer 2

a journal entry

a record of one or more financial transaction

Question 3

t account = ?

Answer 3

a visual representation of an individual account

debit = credit always

Question 4

what is the purpose of t accounts?

Answer 4

helps people understand how money moves in & out of an account

Question 5

settlement given/economic benefit source = ?

Answer 5

credit

Question 6

settlement received/economic destination = ?

Answer 6

debit

Question 7

owner brought in £30,000 cash as capital

what accounts are debited/credited?

Answer 7

cash debited 30,000

capital credited 30,000

Question 8

how are accounts closed off for a period?

Answer 8

outstanding amount represents carried down amount

that then becomes the brought down amount (opening balance) for the following period

Question 9

general ledger = ?

Answer 9

the book in which accounts are traditionally kept

also known as “journal for original entry”

Question 10

when a trading transaction occurs, how many journal entries are made?

Answer 10

2

one for the exchange of the items (debit trade receivables, credit sales revenue)

one for the form of settlement (debit cash, credit trade receivables)