Chapter 3: Recording Transactions

Question 1

HMany types of transactions? Listed?

Answer 1

3 types: Inter, Exter, Non-trans events

Question 2

Exter trans?

Answer 2

Trans w outside parties
Give & receive sth in return
Ex: purchase, borrow $, provide & receive services

Question 3

Intern trans?

Answer 3

not involve exter trans

affect entity’s asse, liabilities, equity

Question 4

non-trans event?

Answer 4

not an exchg of goods & services
transformation of eco resourses
Ex: receive order from cust
sign a contract to purchase sth
hiring
change InRate

Question 5

Purposes of source docu?

Answer 5

2 purposes

• written evidence to support entries in acc records
• to control an entity’s resources

Question 6

ABN?

Answer 6

Aus Biz Num

Question 7

ATO

Answer 7

Aus Taxation Office

Question 8

What’s trans?

Answer 8

trans = eco events recorded in acc sys

Question 9

interim statements?

Answer 9

statements prepared for exter users b4 end of annual period

Question 10

Acc cycle steps?

Answer 10

Steps in cycle:
1. Recog & record trans
2. Prepare fin statements
  -> start new period
Acc records
 Source doc ---> fin statements

Question 11

where are trans recored?

Answer 11

ledger accounts

Question 12

general ledger?

Answer 12

place all accounts are maintained

Question 13

HMany parts per account?

Answer 13

3 prts:

1. title
2. place for recording incre
3. place for recording decre

Question 14

Left-hand side of T-account is….

Answer 14

Debit = Dr

Question 15

Right-hand side of T-account is

Answer 15

Credit = Cr

Question 16

acc balance?

Answer 16

= Diff btw Sum Dr & Sum Cr

Question 17

Sum Dr > Sum Cr

Answer 17

Debit balance

Question 18

Sum Dr

Answer 18

Credit balance

Question 19

Sum Dr = Sum Cr

Answer 19

zero balance

Question 20

cash is received -> cash acc Dr/Cr?

Answer 20

Cash acc Dr

Liab acc Cr

Question 21

cash is paid -> cash acc Dr/Cr

Answer 21

Cash acc Cr

Liab acc Dr

Question 22

increase asset

Answer 22

Dr Asset acc

Question 23

increase liabi

Answer 23

Cr Liab acc

Question 24

increase owner’s equity

Answer 24

Cr owner’s equity

Question 25

increase REV

Answer 25

Cr REV

Question 26

increase expenses

Answer 26

Dr Expense

Question 27

what includes in asset accounts?

Answer 27

cash, account receivable, other receivable or debtors, prepaid expenses, land, buildings, plant and equipment

Question 28

what’s in liabilities accounts?

Answer 28

A/P, unearned income, other current liabilities, GST payable and receivable, mortgage payable

Question 29

2 separate account in equity

Answer 29

cash

drawings or withdrawals

Question 30

equity equation:

Answer 30

= investment by owner - Drawing by the owner + income - expense

Question 31

A/R?

Answer 31

= trade debtors = amount that customers owed an entity

Question 32

prepaid expense

Answer 32

Ex: prepaid insurance, prepaid rent

Question 33

plant n equipment

Answer 33

physical items used in the entity for a relatively long period of time

Question 34

asset increase –>

Answer 34

Dr Asset

Question 35

Cr Asset

Answer 35

asset decrease

Question 36

normal balance of asst?

Answer 36

Dr asset

Question 37

liab decre?

Answer 37

Dr liab

Question 38

liabi incre?

Answer 38

Cr liab

Question 39

normal balance of liab

Answer 39

Cr Liab

Question 40

equity decre

Answer 40

Dr Equity

Question 41

equity incre

Answer 41

Cr Equity

Question 42

normal balance of equity

Answer 42

Cr Equity

Question 43

incm incre?

Answer 43

Cr Incm

Question 44

incm decre?

Answer 44

Dr Incm

Question 45

normal balance of incm?

Answer 45

Cr Incm

Question 46

Expense incre?

Answer 46

Dr expense

Question 47

Expense decre?

Answer 47

Cr expense

Question 48

expense account will go to…..?

Answer 48

Dr Equity (b/c it decreases equity)

Question 49

income account will go to….?

Answer 49

Cr Equity (b/c ít increases equity)