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Flashcards in MN-1003 Deck (67)
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1

On an account, which side is credit and which side is debit?

LHS: Debit
RHS: Credit

2

What is the formula for assets?

Assets = Liabilities + Owner's Equity

3

What 2 categories can Assets be broken down into?

Fixed & Current

4

What are the definitions of:
a) Fixed Assets
b) Current Assets

a) Fixed = items retained for over 1 year
b) Current = items that will be used within 1 year

5

What is the term for when assets are transferred between different forms? (e.g. stock is bought with cash)

A shift in the composition of assets

6

What happens to assets when there is a shift in the composition of assets?

Nothing, they still hold the same value

7

Define 'Trade Payable'

The amount of money owed to creditors from a purchase

8

What part of the accounting equation does 'Trade Payable' fall into?
a) Asset
b) Liability
c) Equity

b) Liability

9

Define 'Trade Receivable'

The amount of money the company is owed by customers

10

What part of the accounting equation does 'Trade Receivable' fall into?
a) Asset
b) Liability
c) Equity

a) Asset

11

Define 'Capital'

The owner's investment into the company

12

Define 'Withdrawls'

A record of assets taken out of the firm by the owner for personal use

13

What is 'Double-Entry Bookkeeping'?

The standard account we use with debit & credit where, when assets increase, owner's equity also increases

14

Define 'Revenue'

The earnings from sales

15

Define 'Expenses'

The cost of running a business

16

Define 'Sales Return'

Where sales are made but then the goods are returned

17

Define 'Purchase Return'

Where purchases are made but some goods are returned to where the firm bought them from

18

In the 𝘊𝘒𝘴𝘩/π˜‰π˜’π˜―π˜¬ 𝘈𝘀𝘀𝘰𝘢𝘯𝘡𝘴 𝘰𝘯𝘭𝘺, which side of the account does 'money in' go?

Debit

19

In the 𝘊𝘒𝘴𝘩/π˜‰π˜’π˜―π˜¬ 𝘈𝘀𝘀𝘰𝘢𝘯𝘡𝘴 𝘰𝘯𝘭𝘺, which side of the account does 'money out' go?

Credit

20

After submitting a transaction into the cash/bank account, which side of the other 'T account' does it go into?

The opposite

21

What term is submitted into the account to make credit and debit equal after the accounts are filled in?

'Balance c/f'

22

What term is submitted after the total to show how much credit/debit was needed to make credit and debit equal?

'Balance b/f'

23

What does the 'Trial Balance' do?

Takes the balance of all the 'T-accounts' and lists them as debits or credits

24

What is unique about the total of the 'Trial Balance'?

The credit side should be equal to the debit side

25

What is auditing?

An external check that the sales and cash balance are correct

26

What are the 4 steps of accounting?

- Record Data
- Classify Data
- Summarise Data
- Communicate

27

Explain what is meant by an asset shift

When the composition of assets changes but total assets remain the same

28

Define Creditor

Someone the firm owes money to

29

Define Debitor

Someone who owes the firm money

30

What happens to the owner's equity as revenue increases?

Owner's equity also increases