Podcast
Questions and Answers
What is the effect on the Cash account when an owner contributes $20,000 in cash to start a business?
What is the effect on the Cash account when an owner contributes $20,000 in cash to start a business?
- Cash account is debited (correct)
- Cash account remains unchanged
- Cash account is credited
- Cash account is closed
Which account is credited when an owner contributes cash to the business?
Which account is credited when an owner contributes cash to the business?
- Expense
- Revenue
- Liabilities
- Capital (correct)
What is a characteristic of a ledger in accounting?
What is a characteristic of a ledger in accounting?
- It accumulates changes in specific account balances. (correct)
- It records every transaction in separate journals.
- It can only show credit entries.
- It contains detailed descriptions of each transaction.
In terms of normal balances, what type of balance does the Cash account typically have?
In terms of normal balances, what type of balance does the Cash account typically have?
When balancing an account, what does it mean to determine the amount carried forward to the next period?
When balancing an account, what does it mean to determine the amount carried forward to the next period?
In accounting, if a debit entry is made in the journal, what happens to the ledger account for that entry?
In accounting, if a debit entry is made in the journal, what happens to the ledger account for that entry?
What happens to the Capital account when a business owner contributes cash to the business?
What happens to the Capital account when a business owner contributes cash to the business?
Which part of the ledger reflects an increase in an asset account?
Which part of the ledger reflects an increase in an asset account?
How are debits and credits represented in a cash ledger?
How are debits and credits represented in a cash ledger?
What is a key characteristic of a ledger in accounting?
What is a key characteristic of a ledger in accounting?
When balancing a ledger account, which action must be taken to determine the amount carried forward?
When balancing a ledger account, which action must be taken to determine the amount carried forward?
What does a debit entry in the cash ledger indicate?
What does a debit entry in the cash ledger indicate?
Which of the following is not a component of a ledger account?
Which of the following is not a component of a ledger account?
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.
