Basic Principles
What is double entry?
A basic principle that ensures every transaction is entered as a debit in one account and a credit in another
How many steps are their when balancing an account?
5
What is accounts payable?
An account used to record company debts owed to suppliers
What is the left side of an account known as?
Debit side
What is the first step in balancing off an account?
The first step is to add up the amounts on each side of the account to find the totals.
What are assets?
What the business owns, such as cash, equipment, or inventory
What is the credit side?
The side that records decreases in assets and increases in liabilities or equity
How do you calculate the balance carried down?
To find the balance carried down, subtract the smaller total from the larger total.
What is drawings?
Money withdrawn by the owner for personal use
What is another name for capital?
Equity
What figure needs to be entered to make both sides equal?
The balance carried down needs to be entered to ensure that both sides of the account are equal.
What is a liability account?
Is an account that increases with a credit
What are debtors and creditors?
Debtors owe money to your business, while creditors are those your business owes money to.
List all the steps when balancing off an account.
1. Add 2 sides
2. subtract
3. balance c/d
4. Total
5. Balance b/d
What is the accounting equation?
Assets=Liability+Capital