Week 2

Question 1

What is the Chart of Accounts?

Answer 1

A listing of the complete account titles and their related numbers

Question 2

What are the 3 parts of a Ledger Account?

Answer 2

1. The tittle
2. Place for recording increases
3. Place for recording decreases

Question 3

What are the 6 columns in Ledger Account

Answer 3

Debit side
1. Date
2. Explanation 
3. Amount
Credit side - same 3 columns.

Question 4

Assets are _____ in nature

Answer 4

Debit.

Question 5

If an asset exists, the balance will be on the debit or credit side?

Answer 5

Debit.

Question 6

What is the opposite of Debits?

Answer 6

Credits.

Question 7

Liablities are _____ in nature

Answer 7

Credit

Question 8

Equity are _____ in nature

Answer 8

Credit

Question 9

If a liability exists, the balance will be on the debit or credit side?

Answer 9

Credit.

Question 10

Debits must equal

Answer 10

Credits

Question 11

Credits must equal

Answer 11

Debits

Question 12

As liabilities and equity are credit in nature, they are increased by putting on amounts on the ______________ side of the ledger account.

Answer 12

Credit / RHS

Question 13

As liabilities and equity are credit in nature, they are decreased by putting on amounts on the ______________ side of the ledger account.

Answer 13

Debit / LHS

Question 14

As Income increases Equity, and Equity is increased with a Credit (entry on the right of the ledger account),
Income must have a ___________________ balance.

Answer 14

Credit

Question 15

Income accounts must be increased with a ______________ and decreased with a ______________.

Answer 15

1. Credit

2. Debit

Question 16

As Expenses decrease Equity, and Equity is decreased with a Debit (entry on the left of the ledger account),
Expenses must have a ___________________ balance.

Answer 16

Debit

Question 17

Expense accounts must be increased with a ______________ and decreased with a ______________.

Answer 17

1. Debit

2. Credit

Question 18

What is the Accounting Equation?

Answer 18

Assets = Liablities + Equity

Question 19

What is the EXPANDED Accounting Equation?

Answer 19

Assets = Liabilities + (Equity + (Income - Expenses))

Assets = Liabilities + Equity + (Income - Expenses

Assets + Expenses = Liabilities + Equity + Income

Question 20

What are the objectives of Financial Reporting (Per Conceptual Framework?

Answer 20

1. To provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.
2. Accounablity - Financial reports also show the results of the stewardship of management or the
   accountability of management for the resources entrusted to it.

Question 21

What is the General Ledger Account?

Answer 21

A device used to record increases and decreases for each individual item that appears in a financial statement

Question 22

What is the ledger?

Answer 22

A collection of accounts relating to an entity

Question 23

Action to increase an Asset?

Answer 23

Debit

Question 24

Action to decrease an Asset?

Answer 24

Credit

Question 25

Action to increase Liability?

Answer 25

Credit

Question 26

Action to decrease Liability?

Answer 26

Debit

Question 27

Action to increase Equity?

Answer 27

Credit

Question 28

Action to decrease Equity?

Answer 28

Debit

Question 29

Action to increase Expenses?

Answer 29

Debit

Question 30

Action to decrease Expenses?

Answer 30

Credit

Question 31

Action to increase Income?

Answer 31

Credit

Question 32

Action to decrease Income?

Answer 32

Debit

Question 33

What is the Trial Balance?

Answer 33

A statement listing all of the accounts in the general ledger and their respective Debit or Credit balance.

Question 34

What errors might cause the Trial Balance not to balance?

Answer 34

1. Transposition error(e.g. $450 written as $540) 2. Only one side of a transaction has been recorded 3. A credit entry has been wrongly entered as a debit, or vice versa 4. A mathematical mistake has been made – Calculating the balance of a ledger account – Additions in the Trial Balance

Question 35

What errors might have occurred but the Trial Balance still balance?

Answer 35

1. A correct amount posted to the wrong account 2. A journal entry omitted 3. A journal entry posted twice 4. Incorrect amounts posted to both correct accounts 5. Compensating errors