Topic 4: The Double Entry System

Question 1

1. What is the double-entry rule?

Answer 1

According to the duality concept, each transaction has a dual effect on the accounting equation. For each transaction, there will be a debit entry in one account and a credit entry in another account.

Question 2

2. Explain the difference between cash and credit transactions

Answer 2

Cash transactions means at the cash is received or paid at the point of trade while credit transactions mean cash is not paid at the point of trade, it will be paid at a later date.

Question 3

3. State the reasons for the returns of goods.

Answer 3

Reasons for return of goods:
● Defective/damaged/faulty goods
● Goods are of the wrong specifications (Example: Wrong colour, wrong size, wrong quantity etc.)