Module 3

Question 1

Depreciation journal entry

Answer 1

Dr P+L depreciation expense

Cr Accumulated depreciation (plant and equip)

Question 2

Capitalisation journal entry (bought something for 2000)

Answer 2

Dr Fixed Asset (e.g equipment) 2000

Cr Bank 2000

Question 3

Other names for trade debtors?

Answer 3

Trade receivables

Sales ledger control account

Question 4

Other names for trade creditors?

Answer 4

Trade payables

Purchase ledger control account

Question 5

Definition of depreciation?

Answer 5

Economic consumption of value

Question 6

Buy a motor vehicle on credit journal entry?

Answer 6

Dr Motor vehicle- asset

Cr trade payables

Question 7

What are the two methods of depreciation?

Answer 7

Reducing balance

Straight line

Question 8

Depreciable expense?

Answer 8

Aim to account for what estimate will get back in so many years

Question 9

Depreciation is an example of what concept?

Answer 9

Accruals

Question 10

What don’t you factor in the reducing balance method?

Answer 10

Scrap

Question 11

Straight line method is

Answer 11

Depreciation the same every year

Question 12

Reducing balance method is?

Answer 12

Depreciation is smaller every year

Question 13

How is VAT accounted for with regards to net and gross?

Answer 13

Net 100%
VAT 20%
Gross 120%

Question 14

Accrual is a what in the balance sheet?

Answer 14

Liability

You owe money

Accrued expense

Had work done/received goods but not been paid yet, e.g invoiced after year end

Question 15

Accrued income is what in balance sheet?

Answer 15

Asset

Someone owes you money, asset for use, done work but not been paid yet

Question 16

Prepaid expense (prepayment) is what in balance sheet?

Answer 16

Asset

So debit

Question 17

Deferred income is what in balance sheet?

Answer 17

Liability

Credit

Prepaid to me
We’ve been paid but not done the work, obligation to do so

Question 18

Cost of sales calculated how?

Answer 18

Opening inventory + purchases - closing inventory

Question 19

If you have accruals and prepayments in the trial balance where are they from?

Answer 19

Last year

Question 20

What to do with accruals and prepayments in trial balance?

Answer 20

Last years
Reverse opening accrual/prepayment
Process what’s actually paid
Calculate year end accrual or prepayment

Question 21

Accrued income goes where in balance sheet?

Answer 21

Asset

Debit
Asset for use, done work but not been paid yet

Question 22

Suspense accounts can’t be

Answer 22

In final account

Need to be fixed first

Question 23

How to correct something posted in wrong side by error?

Answer 23

Times it by 2 to fix

Question 24

Contra entry is

Answer 24

If someone buys off you in credit but is also a supplier

Question 25

Contra entry impact?

Answer 25

Always has the impact of reducing receivables and payable

Question 26

Journal entry for disposal with profit and depreciation

Answer 26

Dr bank (proceeds, sold for) Dr depreciation Cr cost Cr profit/loss