Module 2 Flashcards
How is financial data recorded?
Sales and expenses are input to the computerised accounting system bases on sales invoices and supplier invoices.
Cash receipts and cash payments are input based on cash transactions, electronic transfers and cheque transactions etc
Manual input required for other transactions, period end adjustments and the correction of errors.
What update the nominal ledger?
Journal entries
What accounts are in the nominal ledger?
Accounts for each asset balance, liability balance, capital balance, income transaction type and expense transaction type.
what is the trial balance?
a period end summary of balances and cumulative amounts of each transaction type within the nominal ledger.
Trial balance identifies debit balances and cumulative amounts of each type separately from credit.
What is used to produce the financial statements?
The amounts from the trial balance
How is the balance sheet prepared?
As at the period end date
How is the profit and loss account prepared?
For the period ended.
What is the chart of accounts?
The list of the nominal accounts that make up the nominal ledger
What is the aged debtor ledger?
a subsidiary ledger, helps to keep track of the balances owed by individual customers
What is the accounting equation?
Capital = Assets -Liabilities
and capital = capital introduced +(income- expenses)-drawings
What is DEAL?
Drawings, expenses, assets, losses
What is CLIP?
Capital, liabilities, income, profit
Examples of period-end adjustments?
- Depreciation charge on PPE
- Cost of sales and inventories
- Bad debt write offs/doubtful debts
- accrued and prepaid expenses
- accrued and deferred income
