Week 3 Flashcards
(20 cards)
Q: What are books of original entry?
The first place financial transactions are recorded, before being transferred to the ledger accounts.
: Name 3 examples of books of original entry.
Sales Day Book, Purchases Day Book, Cash Book.
What is recorded in the Sales Day Book?
Sales made on credit.
What is recorded in the Cash Book?
All cash and bank transactions — both inflows and outflows.
What is a ledger account?
: An account that summarises transactions by category (e.g., sales, rent), used to prepare the trial balance.
Q: What is a T-account?
A: A visual format of a ledger account shaped like a “T”, showing debits (left) and credits (right).
Q: Which side is debit in a T-account?
A: The left-hand side (Dr).
What type of accounts are usually debit?
Assets and Expenses (they increase on the debit side).
Q: What type of accounts are usually credit?
A: Liabilities, Income, and Equity (they increase on the credit side).
What is the dual aspect concept?
Every transaction affects two accounts: one debit and one credit.
What’s the rule for debits and credits in double-entry?
Total debits must always equal total credits.
Give an example of a double-entry for buying equipment for cash.
Debit Equipment (Asset ↑), Credit Cash (Asset ↓)
What is the expanded accounting equation?
Assets=Liabilities+OpeningEquity+Profit+CapitalIntroduced−Drawings
Which accounts are permanent and carried forward?
Assets, Liabilities, Equity.
Which accounts are temporary and closed to zero?
Income and Expenses.
What is Balance c/d?
Balance carried down” — the figure used to make both sides of a T-account equal.
What is Balance b/d
Balance brought down” — the opening balance of the next period.
When do we not bring down a balance into the next period?
For income and expense accounts — they’re closed to zero.
What is a Trial Balance?
: A summary list of all debit and credit balances from the general ledger to check arithmetic accuracy.
What must the totals in a trial balance do?
Debits must equal credits.
