Double Entry Bookkeeping

Question 1

what is double entry bookkeeping known as?

Answer 1

accounting equation

Question 2

for every transaction, there is how many financial effects?

Answer 2

2

Question 3

what r the 2 different financial effects known as?

Answer 3

‘the dual effect principle’

Question 4

accountating purposes, what is the business owner seperate from?

Answer 4

the business owner is seperate from the business

Question 5

the owner seperate from the business is known as what?

Answer 5

the seperate entity principle

Question 6

what does seperate entity principle mean?

Answer 6

means that if the owner invests money into the business, this is shown as capital introduced

Question 7

what does capital introduced mean?

Answer 7

money invested becomes a liability for the business, as the business owes money.

Question 8

what will profit increase?

Answer 8

increase the owners capital acc & any drawings the owner takes will reduce this.

Question 9

what assets can be owned and controlled by the business?

Answer 9

car, premises, cash, inventory, bank balance

Question 10

what are liabilites?

Answer 10

liabilities are things owed by the business

Question 11

examples of liabilites?

Answer 11

business loans, payables (money owed to suplier), liabilites owed for VAT or tax, bank balance -

Question 12

what are drawings?

Answer 12

drawings are money or goods taken from the business by the owner, for their own use

Question 13

what does capital relate to?

Answer 13

capital relates to the moeny, or assets, invested by the business owner.

Question 14

what can capital include?

Answer 14

cash, cars, office equiptment

Question 15

capital amount is owed to who?

Answer 15

owed back to the business owner and is therfore a liability of the business

Question 17

What does the statement of profit and loss show?

Answer 17

The income and expenditure of a business over an accounting period

Question 18

What does the profit and loss statement show?

Answer 18

It determines if the business has made a profit or loss

Question 19

What does the statement of fiannaicla position show?

Answer 19

Shows the assets and liabilities of a business as of the last day of the accounting period

Question 20

What is capital income

Answer 20

Capital income is income received from the sale of the capital assets of a business

Question 21

Eg of capital income

Answer 21

Sale of a motor vehicle, sale of a property, sale of office equipment

Question 22

Where would capital sales be show?

Answer 22

On statement of profit and loss

Question 23

What is capital expenditure

Answer 23

This is incurred on the purchase for non current assets or alteration/improvement of non current assets

Question 24

Example of capital expenditure

Answer 24

Motor vechiles, property, office equipment, improvements to non current assets

Question 25

What is capital expenditure items show?

Answer 25

On the statement of financial position

Question 26

What is revenue income?

Answer 26

This is received on the day to day business actives

Question 27

Eg of revenue income

Answer 27

Sales of services, sales of good

Question 28

Where will revenue income be shown?

Answer 28

On the profit and loss statement

Question 29

What is revenue expenditure

Answer 29

This is incurred on the day to day running expenses of the business

Question 30

Example of revenue expenditure

Answer 30

Light and heat, staff training, repairs, rent

Question 31

Where will revenue expenditure be shown

Answer 31

Profit or loss statement

Question 32

What is a trial balance

Answer 32

A list of the business assets, liabilities, income and expense

Question 33

Is premises asset or liability

Answer 33

Asset

Question 34

Office equipment asset or liability

Answer 34

Asset