T-Account and double entry rule
What can be seen on a properly labelled T-Account?
Name of the account, Debit (Dr). and Credit (Cr), dollar sign ($), date, details, folio and Amount.
What are assets?
Assets are resources owned by the business.
Two causes for an increase in stock are
Purchased of stock
Returns inwards - goods returned to the business by customers
Start business with $5000 in the bank
Dr Bank a/c and Cr Capital a/c
Paid rent $345 cash
Dr. Rent expense a/c and Cr. Cash a/c
The left hand side of the T- account is called_______ while the right hand side is called________.
debit
credit
Define liability
Liability is an amount owed by the business to supplier or lender.
Two causes for reduction in stock
Sale of goods
Returns outwards - goods returned by the business to suppliers
Bought motor van on credit from Speed and Sons Ltd
Dr. Motor van a/c and Cr. Speed and Sons a/c
J Payne return goods to us $23
Dr. Returns inwards a/c and Cr. J Payne a/c
Assets increase on the (a)___________ and decrease on the (b)_____________
a) debit
b) credit
Capital is
the amount of money invested in the business by the owner.
Drawing increase on the __________________ because it reduces____________.
What is drawings?
Drawing increase on the ___debit side_______________ because it reduces _capital____.
What is drawings? is any money or goods taken out of the business by the owner for personal use.
Bought goods on credit from J paradise $ 5000
Dr. Purchases a/c and Cr. J Paradise a/c
Goods returned by us to J Paradise $34
Dr. J. Paradise and Cr. Returns outwards a/c
Capital and liabilities increase on the a)_______________ and decrease on the b)______________
a) credit
b) debit
What is another name for capital?
Equity
State when each account is used:
Sales Account
Returns inwards account
Purchases account
Returns outwards account
Purchases account
A Purchase account is used to record the purchase of goods for resale.
Sales account
A sales account is used to record the sale of goods
Returns inwards account/sales return
Returns inwards account, also known as the sales return account, is an account to record goods returned to the firm by its customers.
Purchases account
A Purchase account is used to record the purchase of goods for resale.
Sales account
A sales account is used to record the sale of goods
Returns inwards account/sales return
Returns inwards account, also known as the sales return account, is an account to record goods returned to the firm by its customers.
Sold goods on credit to J Payne $200.
Dr. J Payne a/c and Cr. Sales a/c
Commission received by cheque $ 500
Dr. Bank a/c and Cr. commission received a/c
Complete the following statement
Capital and liabilities are treated the same way because capital.............
is a form of liability that is owed to the owner by the business.
Define stock
stocks are goods in which the business deals that are bought for the main purpose of resale.
Revenue increase on the ____________ because it increases ______________.
Expenses increase on the ____________ because it decreases ___________.
Revenue increase on the _credit side___ because it increases ___capital _.
Expenses increase on the __debit side__________ because it decreases ____capital_______.
Where profit is used in place of capital answer can be accepted.
Took $500 out of cash till and place it in the bank
Dr. Bank a/c and Cr. cash a/c
Sold motor van no longer needed for $450 cash
Dr. Cash a/c and Cr. Motor van a/c