Lecture Two Flashcards
What do businesses keep a set of
books or ‘ledgers’ with an account for each item
What is the name for all these accounts
nominal ledger / general ledger
What do accountants use the nominal ledgers for
They use the figures from the nominal ledgers to prepare financial statements
What isnt used in the accounts to record transactions
Plus and minus signs are not used
What system do accountants use to record the transactions
debit and credit
How are the accounts split?
In halves
What side is the debit side?
Always the left side
What side is the Credit side
Always the Right side
What are these accounts called?
T accounts
What is the accounting equation
Capital = Assets - Liabilities
What must debit and credit do?
ALWAYS balance
What happens if assets increase
Debit increases and Credit decreases
What happens if capital/liabilities Increase?
Credit increases and Debit decreases
Which is bad? Credit or debit?
Neither are bad - its just a system
