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?
Signup and view all the answers
When balancing an account, what does it mean to determine the amount carried forward to the next period?
Signup and view all the answers
In accounting, if a debit entry is made in the journal, what happens to the ledger account for that entry?
Signup and view all the answers
What happens to the Capital account when a business owner contributes cash to the business?
Signup and view all the answers
Which part of the ledger reflects an increase in an asset account?
Signup and view all the answers
How are debits and credits represented in a cash ledger?
Signup and view all the answers
What is a key characteristic of a ledger in accounting?
Signup and view all the answers
When balancing a ledger account, which action must be taken to determine the amount carried forward?
Signup and view all the answers
What does a debit entry in the cash ledger indicate?
Signup and view all the answers
Which of the following is not a component of a ledger account?
Signup and view all the answers
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.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
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.