Chapter 3 - Double entry bookeeping

Question 1

What is the duel conecpt

Answer 1

A concept that every transaction has a duel effect.

Question 2

What are the debit and credit rules?

Answer 2

DEAD CLIC

Debit

• Increase Expense, Asset, Drawing

Credit

• Increse Liability, Income, Capital

Opposite side to decrease

Question 3

1. How are ledger accounts (T accounts) set up?
2. How are they balanced off?

Answer 3

• Dr left, Cr right
• The name of the opposing duel effect action goes under the heading of that duel effect
• Calcuate which of the Dr or Cr are greatest, calculate teh differnce.
• bal c/f on smaller side, bal b/f on larger side

Question 4

What is a trial balance?

Answer 4

A list of all the closeing balances from the ledger accounts.

Question 5

1. What is equity?
2. What is share capital?
3. What is retained earnings?

Answer 5

1. The company version of capital
2. Balance at start of year + further investments by shareholders
3. Balance at start of year + profit for year - dividends (shareholder drawings)