Questions and Answers
What is the effect on the Cash account when an owner contributes $20,000 in cash to start a business?
Which account is credited when an owner contributes cash to the business?
What is a characteristic of a ledger in accounting?
In terms of normal balances, what type of balance does the Cash account typically have?
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When balancing an account, what does it mean to determine the amount carried forward to the next period?
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In accounting, if a debit entry is made in the journal, what happens to the ledger account for that entry?
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What happens to the Capital account when a business owner contributes cash to the business?
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Which part of the ledger reflects an increase in an asset account?
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How are debits and credits represented in a cash ledger?
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What is a key characteristic of a ledger in accounting?
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When balancing a ledger account, which action must be taken to determine the amount carried forward?
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What does a debit entry in the cash ledger indicate?
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Which of the following is not a component of a ledger account?
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Study Notes
Journals
- Owner contributions increase business funds; example: $20,000 cash contribution.
- Cash is debited (asset) to reflect increase; Capital is credited (equity) for increase in owner's equity.
- Journal entry format includes date, name of account, debit amount (Dr), and credit amount (Cr).
- Example entry:
- Date: 1/9/2
- Debit: Cash $20,000
- Credit: Capital - N Bartholomew $20,000
Ledgers
- Ledgers accumulate detailed information about changes in account balances over time.
- Each ledger account consists of a debit side (left) and a credit side (right).
- Ledgers serve as an alternative to journals for tracking account transactions.
Rules of Debits and Credits
- Accounts like the cash ledger maintain a normal debit balance.
- Journal entries translate directly to ledger entries; a debit in the journal reflects as a debit in the ledger.
- It is essential to balance each account to determine the amount to carry forward to the next accounting period.
Journals
- Owner contributions increase business funds; example: $20,000 cash contribution.
- Cash is debited (asset) to reflect increase; Capital is credited (equity) for increase in owner's equity.
- Journal entry format includes date, name of account, debit amount (Dr), and credit amount (Cr).
- Example entry:
- Date: 1/9/2
- Debit: Cash $20,000
- Credit: Capital - N Bartholomew $20,000
Ledgers
- Ledgers accumulate detailed information about changes in account balances over time.
- Each ledger account consists of a debit side (left) and a credit side (right).
- Ledgers serve as an alternative to journals for tracking account transactions.
Rules of Debits and Credits
- Accounts like the cash ledger maintain a normal debit balance.
- Journal entries translate directly to ledger entries; a debit in the journal reflects as a debit in the ledger.
- It is essential to balance each account to determine the amount to carry forward to the next accounting period.
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Description
Dive into the basics of journals and ledgers with this ACCY121 Week 3 quiz. Understand how to record transactions, such as owner contributions, using debit and credit methods. Test your knowledge and solidify your accounting fundamentals.
