Week 3 Flashcards
(19 cards)
What is the duality aspect of transactions in accounting?
Each entry is recorded twice in the accounting records.
Where are debits (DR) recorded in a T-account?
On the left-hand side.
Where are credits (CR) recorded in a T-account?
On the right-hand side.
What is the Accounting Equation at the beginning of the period?
OB Assets = OB Liabilities + OB Equity.
How is the Closing Balance (CB) Assets calculated?
CB Assets = CB Liabilities + OB Equity + Profit + ∆ Equity Capital.
What is the formula for Profit?
Profit = Revenue – Expenses.
What happens to Assets in the accounting equation?
Assets = Liabilities + OB Equity + Revenue – Expense + ∆ Equity Capital.
Fill in the blank: Debit entries increase ______ and ______, and decrease liabilities, equity, and revenue/income.
assets, expenses
Fill in the blank: Credit entries increase ______, ______, and revenue/income and decrease assets and expenses.
liabilities, equity
Does OB Equity get affected by debiting or crediting?
No, OB Equity will not be affected.
What happens at the end of the accounting period to the transactions?
All transactions are entered in the ledger accounts.
What does it mean to balance off an account?
It means closing the account for that period and starting a new account for the next period.
What is the time period/periodicity concept?
The life of the entity can be divided into specific periods for financial statement preparation.
What is a closing entry?
An entry made to balance off an account.
How is the balancing figure calculated?
As the difference between the two sides of the T account.
What happens to revenue and expense accounts at the end of the period?
They are closed off to zero, and a new account is opened next period with no opening balance.
What happens to asset, liability, and equity accounts at the end of the period?
The closing balance is carried forward to the next period.
What does c/d or c/f stand for?
Closing down or carried forward.
What does b/f or b/d stand for?
Balance brought forward or brought down.
