S1L4 Bookkeeping No.2 Flashcards
How is your bank statement presented to you?
From the banks point of view
If you have savings in your bank account, how is this presented to you? i.e. debit or credit & why
Presented as a CREDIT entry because it’s the banks liability to pay you that amount.
What is an Audit Trail?
Entering dates of transactions on the T account
What must you do when making a ‘T’ account?
- 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
What are Sundry Expenses?
Miscellaneous expenses
How do you balance an account?
• 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
What is the Trial Balance?
A list of Dr and Cr balances taken from the nominal/general ledger.
Purpose of the Trial Balance?
Check to ensure the Dr = Cr
What is a Current Asset?
An asset that is going to be used within 12 months
What is a Non-current Asset?
An asset that is going to be used for longer than 12 months
What bookkeeping errors cause a trial balance to not balance?
- 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