Flashcards in MN-1003 Deck (67)
On an account, which side is credit and which side is debit?
What is the formula for assets?
Assets = Liabilities + Owner's Equity
What 2 categories can Assets be broken down into?
Fixed & Current
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
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
What happens to assets when there is a shift in the composition of assets?
Nothing, they still hold the same value
Define 'Trade Payable'
The amount of money owed to creditors from a purchase
What part of the accounting equation does 'Trade Payable' fall into?
Define 'Trade Receivable'
The amount of money the company is owed by customers
What part of the accounting equation does 'Trade Receivable' fall into?
The owner's investment into the company
A record of assets taken out of the firm by the owner for personal use
What is 'Double-Entry Bookkeeping'?
The standard account we use with debit & credit where, when assets increase, owner's equity also increases
The earnings from sales
The cost of running a business
Define 'Sales Return'
Where sales are made but then the goods are returned
Define 'Purchase Return'
Where purchases are made but some goods are returned to where the firm bought them from
In the 𝘊𝘢𝘴𝘩/𝘉𝘢𝘯𝘬 𝘈𝘤𝘤𝘰𝘶𝘯𝘵𝘴 𝘰𝘯𝘭𝘺, which side of the account does 'money in' go?
In the 𝘊𝘢𝘴𝘩/𝘉𝘢𝘯𝘬 𝘈𝘤𝘤𝘰𝘶𝘯𝘵𝘴 𝘰𝘯𝘭𝘺, which side of the account does 'money out' go?
After submitting a transaction into the cash/bank account, which side of the other 'T account' does it go into?
What term is submitted into the account to make credit and debit equal after the accounts are filled in?
What term is submitted after the total to show how much credit/debit was needed to make credit and debit equal?
What does the 'Trial Balance' do?
Takes the balance of all the 'T-accounts' and lists them as debits or credits
What is unique about the total of the 'Trial Balance'?
The credit side should be equal to the debit side
What is auditing?
An external check that the sales and cash balance are correct
What are the 4 steps of accounting?
- Record Data
- Classify Data
- Summarise Data
Explain what is meant by an asset shift
When the composition of assets changes but total assets remain the same
Someone the firm owes money to
Someone who owes the firm money