Chapter 3: Double Entry Bookkeeping and Preparation of Financial Statements Flashcards

1
Q

Explain:
DEAD CLIC

A

An increase in Expense, assets or drawings will create a debit
D - Debit
E - Expense
A - Assets
D - Drawings

An increase in liabilities, income or capital will create a credit
C - Credit
L - Liability
I - Income
C - Capital

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2
Q

How do we record purchase of inventory?

A

Dr Purchases
Cr Cash/Trade Payables

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3
Q

How do we record sales of inventory?

A

Dr Cash/Trade Receivables
Cr Sales Income

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4
Q

What is the double entry for:
- Edward started a business with £20,000 in a business bank account

A

Dr Cash 20,000
Cr Capital 20,000

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5
Q

What is the double entry for:
- paid rent of £1,500 cash

A

Cr Cash
Dr Rent Expense

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6
Q

What is the double entry for:
- Made purchases for £350 cash

A

Dr Purchases 350
Cr Cash 350

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7
Q

What is the double entry for:
- Bought Stationery for £55 cash

A

Cr Cash 55
Dr Stationery Expense 55

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8
Q

What is the double entry for:
- made purchases from Joe for £245 on credit

A

Dr Purchases 245
Cr Trade Payables 245

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9
Q

What is the double entry for:
- Sold books for £1,200 cash

A

Dr Cash
Cr Sales

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10
Q

What is the double entry for:
- Took £250 from the business to pay for a holiday

A

Dr Drawings 250
Cr Cash

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