The Accounting System

Question 1

What is a ledger?

Answer 1

A collection of accounts in which all the transactions of an enterprise are recorded. This is the T account.

Question 2

What is the left side?

Answer 2

Debit side and assets

Question 3

What is the right side?

Answer 3

Credit side and equity and liabilities.

Question 4

Where do assets increase?

Answer 4

Debit side.

Question 5

Where do equity and liabilities increase?

Answer 5

Credit side.

Question 6

Where does capital appear?

Answer 6

1. Right side and has a credit balance
2. increases with entry on the credit side.
3. does not decrease because it is reflected in the drawings account.

Question 7

Where does drawings appear?

Answer 7

1. Right side as part of owner’s equity.
   Decreases equity
2. has a debit balance
3. increases with entries on the debit side.
4. Does not decrease
5. Owner’s contribution is shown as an increase in capital account
6. if owner makes drawing, shown as increase in drawings.

Question 8

What side is income on?

Answer 8

1. Right side as part of equity
2. Credit total
3. increases with entries on credit side
4. decreases with entries on debit side.

Question 9

What side do expenses appear?

Answer 9

1. Right side as owner’s equity
2. Decrease equity
3. Debit total
4. increases with entries on debit side
5. Decreases with entries on credit side,

Question 10

What are ledgers divided into?

Answer 10

Balance sheets and nominal accounts.