Preparing Financial Statements For Sole Traders Flashcards
When is balance carried down used?
The closing balance within the period.
When is balance brought down used?
It is used to open the balance in a new period. It is the balance carried down
How do you close off a t-account?
Leave a blank line under the last entry in the ledger then draw parallel lines at the top and bottom of the next line.
Where is the closing balance transferred for a statement of financial position account?
Nowhere. They will carry over to the next period.
Where are balances from statement of profit or loss accounts transferred to at the end of a period?
Statement of profit or loss account. Income and expenditure accounts don’t tend to have opening balances.
Where is the closing balance transferred to in an equity account?
Owners capital account.
To increase the capital introduced in the capital account, is it a debit or a credit?
A credit!
What does a debit balance mean for the statement of profit or loss account?
A FATTY loss
Where is the balance from the statement of profit or loss account transferred?
To the capital account. Debit it with a loss, credit it with a profit.
