Ledger Accounts and Double Entry

Question 1

General Ledger

Answer 1

• Nominal Ledger
• principal/ledger accounts contained within
• accounting record which summarises financial affairs of business

Question 2

Double Entry Bookkeeping

Answer 2

• method by which a business records financial transactions
• account is maintained for every asset/liability/income/expense
• basic rule is that very transaction gives rise to two accounting entries
• one debit/one credit to different accounts
• Total Debits = Total Credits

Question 3

Layout of a T Account/Ledger Account

Answer 3

• Name of Account across the top
• Debits on left side
• credit on right side
• Narrative (other ledger posted to) and then amount

Question 4

DEAD CLIC stand for

Answer 4

Debit
Expense
Asset
Drawings

Credit
Liability
Income
Capital

Question 5

What happen when sale/purchase done on credit on the ledger accounts?

Answer 5

Same ends up happening eventually as a cash sale/purchase but go through payables/receivables

Question 6

what is the point of ledger accounts?

Answer 6

• keep track of all transactions and can get statements/other reports to be generated daily at any time
• credit control monitor receivables
• sales department see best selling items
• manage inventory from sales/purchases

Question 7

What are the 5 steps to balancing-off ledger accounts?

Answer 7

1. add the debit/credit sides separately
2. fill in higher of two totals on both sides
3. balance the two sides with the number required to make them actually balance. this is the balance carried down (c/d)
4. complete double entry of the value you just entered by putting same on other side below total (balance brought down b/d)
   This is starting figure for next transactions
5. If at end of yr/period then any balances for statement of profit/loss (income/expenses) don’t get carried but just put to the statement P-L.

Question 8

Journal

Answer 8

• debit/credit entry for financial transaction
• contains name of ledger accounts being debited/credits and amount
• date of transaction
• may have further narrative to explain

Question 9

what are a few non-routine Transactions/Journals

Answer 9

• year end adjustments
• correction of errors
• may have to be reviewed/authorised