S1L4 Bookkeeping No.2 Flashcards

1
Q

How is your bank statement presented to you?

A

From the banks point of view

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2
Q

If you have savings in your bank account, how is this presented to you? i.e. debit or credit & why

A

Presented as a CREDIT entry because it’s the banks liability to pay you that amount.

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3
Q

What is an Audit Trail?

A

Entering dates of transactions on the T account

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4
Q

What must you do when making a ‘T’ account?

A
  • Enter date of transactions
  • Enter a cross reference
    e.g. if you Dr Cash 50,000 and Cr Capital 50,000 then in the Cash T Account an entry of Capital 50,000 is entered on the debit side and vice versa
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5
Q

What are Sundry Expenses?

A

Miscellaneous expenses

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6
Q

How do you balance an account?

A

Add up debits and credits on an account
• Enter balancing figure to make debit and credit total equal – if one side is greater than the other, insert a ‘balancing’ figure on the lower side
• Balancing figure called balance carried forward (c/f) or carried down (c/d).
• Enter total figures on both columns
• The c/f figure becomes the b/f (brought forward) figure for the next period. Enter this below the total on the opposite side

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7
Q

What is the Trial Balance?

A

A list of Dr and Cr balances taken from the nominal/general ledger.

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8
Q

Purpose of the Trial Balance?

A

Check to ensure the Dr = Cr

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9
Q

What is a Current Asset?

A

An asset that is going to be used within 12 months

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10
Q

What is a Non-current Asset?

A

An asset that is going to be used for longer than 12 months

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11
Q

What bookkeeping errors cause a trial balance to not balance?

A
  • Only a Dr or Cr side of a transaction may be posted with the other half being omitted.
    • A Dr or Cr entry may be made on the wrong side of the ‘T’ account
    • Different amounts may be posted to the Dr and Cr sides (e.g. transposition errors)
    • The ‘T’ account may be added up incorrectly and an incorrect balance transferred to the trial
    balance
    • A Dr balance is entered onto the trial balance as a Cr balance or vice versa
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