A
Refers to the left side of the t-account
What is Debit
Refers to the right side of a t-account
What is Credit
A group of accounts
What is a ledger
"due to suppliers" is which account?
Accounts Payable
Cash is a(n) ...
Asset
Bank loan is a(n)...
Liability
Someone you owe money to
Creditor
Someone who owes you money
Debtor
List the increase and decrease side for each of the following: Asset, Liability, Owner's Equity
1. Asset: increase on debit, decrease on credit
2. Liability + OE: increase on credit, decrease on debit
The mathematical accuracy of the ledger.
What order are accounts listed in a ledger?
Assets, Liabilities, Owner's Equity, Revenue, Expenses.
Accounts Receivable
I bought $3000 worth of equipment with cash. Which account(s) are affected and how?
Cash decreases on credit side by $3000
Equipment increase on debit side by $3000.
What are the limitations to a trial balance?
A trial balance does not indicate if the wrong account was used to record a transaction.
An informal term for a set of financial records that use double-entry bookkeeping
What is a t-account
The owner of a business decides to purchase a basketball net to boost moral with her own money. The net costs $7000. $4000 of which are to be paid at a later date. Which accounts are affected and how?
Equipment: increases by $7000, debit side
Owner's Equity: increases by $4000, credit side
Accounts Payable: increases by $3000, credit side.
Explain the prinicple of double-entry accounting
Each account must have an equal number of debit and credit amounts reported. For each transaction, of the debit amount must always match the total of the credit amounts.
How is the accounting equation used in this unit?
Assets increase on the debit side (right side) whilst liabilities and owner's equity increase on the credit side (left side). Same as A = L + OE
If a business owner purchases something with their own money for the company, which account(s) will be affected in a t-account?
Secured a bank loan for $10,000. Which account(s) are affected?"
Bank Loan: increases on the credit side by $10,000
Cash: increases on the debit side by $10,000