LU4: The bookkeeping Process

Question 1

Business transaction

Answer 1

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

Question 2

Double Entry accounting

Answer 2

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

• > for every debit, there is a credit. Also the sums of debits and credits must be equal.
• > debits on the left, credits on the right

Question 3

Bookkeeping account

Answer 3

Individual record for each account a business uses to record its business transactions. These bookkeeping accounts are listed in an accounting document called the chart of accounts.

Question 4

General Ledger

Answer 4

term referring collectively to all the bookkeeping accounts

Question 5

Asset method

Answer 5

Records the initial purchase to a supplies inventory account

Question 6

Expense method

Answer 6

records the initial purchase to a supplies expense account

Question 7

Contra-Accounts

Answer 7

bookkeeping accounts that have a contrary or reverse effect in their account classification. Only for the following accounts; assets, equity, revenue

Contra accounts have the opposite “normal balance” compared to their account classification