LU4

Question 1

What is a business transaction?

Answer 1

an exchange of property, goods, or services for cash or promise to pay

Question 2

What is double-entry accounting

Answer 2

a bookkeeping process in which every business transaction affects two or more bookkeeping accounts.

Question 3

What is a bookkeeping account?

Answer 3

It is an individual record for each account a business uses to record its business transactions

Question 4

What is the general ledger?

Answer 4

it is a term referring collectively to all the bookkeeping accounts

Question 5

SEE 21 UNIVERSAL TRANSACTIONS ON P. 56 AND P. 64 IMPORTANT!!!

Answer 5

SEE 21 UNIVERSAL TRANSACTIONS ON P. 56 AND P. 64 IMPORTANT!!!

Question 6

What are contra-accounts?

Answer 6

bookkeeping accounts that have a contrary or reverse effect in their account classification. use credit to increase such an account.

Question 7

Examples of contra-accounts:

Answer 7

• Allowance for doubtful accounts (Asset)(Credit)
• Accumulated Depreciation (Asset)(Credit)
• Withdrawals (Equity)(Debit)
• Treasury Stock (Equity)(Debit)
• Sales Allowances (Revenue)(Debit)

Question 8

Classification normal accounts:

• Asset
• Liability
• Equity
• Revenue
• Expense

Answer 8

Asset - Dr
Liability - Cr
Equity - Cr
Revenue - Cr
Expense - Dr