Mr Lewis

Question 1

Income statement

Answer 1

The profit or loss made by the business
Subtract costs from sales revenue to calculate this

Question 2

Statement of financial position

Answer 2

Summaries a company’s assets (what it owns), liabilities (what it owes), and equity (assets less liabilities)

Question 3

What are Trade receivables

Answer 3

The amount of money a business is owed by its customers for goods or services that have been delivered or used, but not yet paid for.

Question 4

Trade payables

Answer 4

A business paying money to any stakeholder in the business (for example: suppliers)

Question 5

Non current assets

Answer 5

Assets/property owned land that are not easily converted to cash within a year (eg: land)

Question 6

What does RAIL stand for

Answer 6

Running costs, Assets, Income and Liabilities
Running costs and assets are debits
Income and Liabilities are credits

Question 7

What’s the difference between debit and credit

Answer 7

Debits are incoming money
Credits is outgoing money

Question 8

Debits (DR) go on the (left or right?) side of each T account

Answer 8

Left
“In England we DRive on the left and CRash on the right”

Question 9

Credits (CR) go on the (left or right?) side of each T account

Answer 9

Right
“In England we DRive on the left and CRash on the right”

Question 10

What are running costs

Answer 10

Running costs is money being regularly spent on certain things in a business
Running costs can be stuff such as wages, utilities, commissions pay & transporting good

Question 11

What are non current assets

Answer 11

Assets and property owned by a business that are not easily converted to cash within a year

Question 12

What is an account

Answer 12

An account is a place where we record all transactions that occur within a business. They’re divided into 3 specific categories: assets, liabilities and owners equity

Question 13

What is typically on the debit side of a receivables ledger

Answer 13

Balance b/d
Credit Sales
Dishonoured Cheque
Discount on dishonoured cheque
Interest to charged receivables

Question 14

What is on the credit side of the receivables ledger

Answer 14

Receipts from the customer
Discounts allowed (if there was any)
Sales returns
Balance c/d

Question 15

What is a payables ledger account

Answer 15

An account that records the money that your business owners to
They may be owing money to creditors, vendors, suppliers, investors etc

Question 16

What is on the debit side of the payables account

Answer 16

Payment to suppliers
Discount received (if there was any)
Purchase returns (credit notes from the purchase returns journal)
Contra with receivables ledger
Balance c/d

Question 17

What is on the credit side of the payables ledger

Answer 17

Balance b/d
Credit purchases (invoices from purchases journal)
Dishonoured cheque (from the cash book)
Discount on dishonoured cheque (if there is)
Interest charges by payables (if there is)