Chapter21 Question and answers correctly solved 2024

Chapter 6/7 - Double entry bookkeeping,
Bookkeeping - Notes 1, Historical
Development of Accounting, Med office
book keeping, Bookkeeping Week 2
How are transactions initially recorded on financial documents? - correct
answer ✔1. Input into books of prime entry


2. Process transactions through ledgers


3. Generate output (e.g. summarise info into reports, trial balances and
financial statements)


Accounting equation - correct answer ✔ASSETS - LIABILITIES = CAPITAL


Double entry bookkeeping system works on a duel effect - correct answer
✔Every transaction has two effects on a business


Debit entries (left side) - correct answer ✔INCREAE
- Assets
- Expenses
- Drawings


DECREASE
- Liabilities
- Income
- Capital

, Credit entries (right side) - correct answer ✔INCREASE
- Liabilities
- Income
- Capital


DECREASE
- Assets
- Expenses
- Drawings


Balancing ledger accounts - correct answer ✔1. Add up the debit and credit
side separately


2. Put the largest of the two totals as the column total for both debit and credit
column


3. Calculate the balancing figure on the side with the lower total and describe
this as the balance carried down (bal c/d)


4. Show this balancing figure on the opposite side below the totals lines, and
describe this figure as the balance brought down (balance b/d)


Capital vs revenue
Expenditure and income - correct answer ✔Capital = 'one off'
Expenses = equipment, property, vehicles
Income = cash from owner, sale of assets