Preparing Financial Statements

Question 1

What is the dual effect

Answer 1

Every transaction affects two things.

TOTAL DEBITS = TOTAL CREDITS

Question 2

DEAD CLIC

Answer 2

Debit: expenses, assets and drawings
Credit: Liabilities, income and capital

Question 3

Expenses

Answer 3

Rent, staff costs, purchases, cost of sales, loss on disposal

Question 4

Assets

Answer 4

Cash, PPE, stock/inventory, trade receivables, prepayments, accrued income, intangibles

Question 5

Drawings

Answer 5

Cash or goods

Question 6

Liabilities

Answer 6

Trade payables, accruals, loans, borrowings, overdraft, deferred income

Question 7

Income

Answer 7

Sales/revenue, other income, profit on disposal

Question 8

Capital

Answer 8

What is owed back to the owner, accumulated profits

Question 9

2 types of memorandum ledger

Answer 9

Receivables ledger and payables ledger

Question 10

Memorandum ledger is

Answer 10

NOT part of double entry

Question 11

What does the trial balance consist of?

Answer 11

A list of all the balances brought down on each ledger accoutnt