Book Keeping Form 1

Contents

1. 1. Introduction to Book-keeping

   1 tests 14 questions

   Topic lessons

   • What is book-keeping?
   • Why keep books? Users of accounting information
   • Source documents
   • From transactions to final accounts
   • Summary

   What is book-keeping? Book-keeping is the systematic recording of the financial transactions of a business in a set of books. A transaction is any business event that involves money or money's worth, for example buying goods, selling goods, paying wages or receiving a loan. Book-keeping is the first stage of accounting…

2. 2. Elementary Balance Sheet

   1 tests 15 questions

   Topic lessons

   • Assets, liabilities and capital
   • The accounting equation
   • Preparing a balance sheet
   • How transactions change the balance sheet
   • Summary

   Meaning A balance sheet is a statement showing the financial position of a business on a particular date. It lists what the business owns (assets) and where the money to buy them came from (capital and liabilities). It is called a "sheet" and not an "account" because it is a summary statement, not part of the double…

3. 3. Classification of Accounts

   1 tests 16 questions

   Topic lessons

   • The ledger and the account
   • Personal accounts
   • Real and nominal accounts
   • Applying the rules of classification
   • Summary

   What is an account? An account is a record in the ledger of all transactions affecting one person, one item of property, or one type of income or expense. Each account has two sides: the left side is the debit (Dr) side and the right side is the credit (Cr) side. The book that holds all accounts is called the ledger .…

4. 4. Double Entry System

   1 tests 16 questions

   Topic lessons

   • The principle of double entry
   • Recording assets, liabilities and capital
   • Recording purchases, sales and returns
   • Recording expenses, incomes and drawings
   • Balancing an account
   • Summary

   The principle The double entry system says that every transaction has two aspects : one account receives a value and another account gives that value. So every transaction is recorded twice : once on the debit side of one account and once on the credit side of another account, with the same amount. Because of this,…

5. 5. Trial Balance

   1 tests 15 questions

   Topic lessons

   • What is a trial balance?
   • Extracting a trial balance from the ledger
   • Errors not revealed by the trial balance
   • Errors that affect the trial balance and the suspense account
   • Summary

   Meaning A trial balance is a list of all the balances in the ledger (including the cash book) on a particular date, with debit balances in one column and credit balances in another. Because of double entry, the two totals should be equal . A trial balance is a statement, not an account. Purposes To check the…

6. 6. Final Accounts

   1 tests 17 questions

   Topic lessons

   • The trading account and gross profit
   • The profit and loss account
   • The balance sheet at the end of the year
   • Final accounts from a trial balance
   • Summary

   Meaning Final accounts are prepared at the end of a trading period (usually one year) to show the result of trading and the financial position. For a sole trader they are: (1) the trading account , (2) the profit and loss account and (3) the balance sheet . They are prepared from the trial balance. Trading account…