Class test Flashcards
(27 cards)
Sales
CR
Sales return
DR
Purchase return
CR
Discounts allowed
Expense therefore DR
Discounts received
Income therefore CR
Accrued expense
Increase expense and increase liability
YE - DR Expense CR Accrual
Prepayment
Decrease expense and increase asset
YE - DR Prepayments CR Expense
Accrual hits
SFP as current liability
Prepayment hits
SFP as current asset
Deferred (prepaid) income hits
SFP as current liability
Expenses hit
P/L
Other income hits
P/L
Deferred income
When business paid in advance for goods
Deferred income
Decrease income
YE - DR Other income CR Deferred income
Accrued income
DR Accrued income CR Other income
Accrued income hits
SFP as current asset
Capital expenditure hits
SFP as non-current asset
Revenue expenditure hits
P/L
Settlement discount
NOT capitalised
Capital expenditure double entry
DR Asset cost CR bank/payable (depends how paid)
Subsequent expenditure can be capitalised if…
1) Increases capacity
2) Increases quality
3) Increases useful economic life of asset
Depreciation double entry
DR Depreciation expense
CR Accumulated depreciation
(no cash leaving business)
Straight line depreciation
(Cost - residual value) / useful economic life
Reducing balance depreciation
NBV / %
