Chapter 3: Double Entry Bookkeeping and Preparation of Financial Statements Flashcards
Explain:
DEAD CLIC
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
How do we record purchase of inventory?
Dr Purchases
Cr Cash/Trade Payables
How do we record sales of inventory?
Dr Cash/Trade Receivables
Cr Sales Income
What is the double entry for:
- Edward started a business with £20,000 in a business bank account
Dr Cash 20,000
Cr Capital 20,000
What is the double entry for:
- paid rent of £1,500 cash
Cr Cash
Dr Rent Expense
What is the double entry for:
- Made purchases for £350 cash
Dr Purchases 350
Cr Cash 350
What is the double entry for:
- Bought Stationery for £55 cash
Cr Cash 55
Dr Stationery Expense 55
What is the double entry for:
- made purchases from Joe for £245 on credit
Dr Purchases 245
Cr Trade Payables 245
What is the double entry for:
- Sold books for £1,200 cash
Dr Cash
Cr Sales
What is the double entry for:
- Took £250 from the business to pay for a holiday
Dr Drawings 250
Cr Cash