Week 3 Double Entry

Question 1

Every transaction has

Answer 1

two effects

Question 2

Double entry ex:
purchase vehicle with bank loan for 50k

Answer 2

1. Increase fixed assets by 50k
2. Increase Bank loan (liabilities) by 50k

Question 3

Double entry ex:
Purchase vehicle by check for 50k

Answer 3

1. Increase fixed assets by 50k
2. Decrease Bank by 50k

Question 4

Double entry ex:
Owner introduces Vehicle to Business 50k

Answer 4

1. Increase Fixed Assets by 50k
2. Increase Capital by 50k

Question 5

Double entry ex:
Paid 50k to clear loan

Answer 5

1. Reduce bank by 50k
2. Reduce loan by 50k

Question 6

Double entry ex:
Owner takes 50k cash out of the business

Answer 6

1. Reduce Bank/Cash by 50k
2. Reduce Capital by 50k

Question 7

Assets = ___ + ___

Answer 7

Capital + Liabilities