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Accounting /POA Sec 3 Chap 4: Concept of Double Entry

POA Sec 3 Chap 4: Concept of Double Entry

Accounting14 CardsCreated 2 months ago

This deck covers the fundamental concepts of double entry accounting, including ledger accounts, double entry rules, and the effects of transactions on assets, liabilities, equity, income, and expenses.

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How does a business record its business transactions?

Through a ledger account, and a business may have many ledger accounts
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Key Terms

Term
Definition
How does a business record its business transactions?
Through a ledger account, and a business may have many ledger accounts
A list of all the ledger accounts used by a business is known as
The Chart of accounts
What is the format of the ledger accounts
Columnar format (computerised) T-format (manual)
What are columns found in the columnar ledger?
Date Particulars Debit Credit Balance
What is unique about the design of the T-format ledger?
It has the shape of capital T The account has 2 sides Left side is debit Right side is credit
What are the double entry recording rules?
Each business transaction will have at least one debit entry to one account and at least one credit entry to another account The total debit value mus...
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POA Sec 3 Chap 4: Concept of Double Entry
TermDefinition
How does a business record its business transactions?
Through a ledger account, and a business may have many ledger accounts
A list of all the ledger accounts used by a business is known as
The Chart of accounts
What is the format of the ledger accounts
Columnar format (computerised) T-format (manual)
What are columns found in the columnar ledger?
Date Particulars Debit Credit Balance
What is unique about the design of the T-format ledger?
It has the shape of capital T The account has 2 sides Left side is debit Right side is credit
What are the double entry recording rules?
Each business transaction will have at least one debit entry to one account and at least one credit entry to another account The total debit value must always equal the total credit entry for each transaction
An increase/decrease in an asset is
debit/credit
An increase/decrease in an liability is
credit/debit
An increase/decrease in an equity is
credit/debit
An increase/decrease in an income is
credit/debit
An increase/decrease in an expense is
debit/credit
A cash contribution from an owner in the cash in hand account and Capital account is considerded as
Debit increase in Cash in hand account Credit increase in Capital account
Cash obtained through borrwing in the cash in hand account and Bank Loan account is considered as
Debit increase in Cash in hand account Credit increase in Bank Loan account
A cash purchase of goods in the inventory account and Cash in Hand account is considered as
Debit increase in Inventory account Credit decrease in Cash in hand account