Chapter 10: Balancing Accounts, accounting equation, capital & revenue. Flashcards Preview

AAT (L2): FINAL Chapter Summary > Chapter 10: Balancing Accounts, accounting equation, capital & revenue. > Flashcards

Flashcards in Chapter 10: Balancing Accounts, accounting equation, capital & revenue. Deck (8)
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1

How often must the traditional 'T' account need to be balanced?

At regular intervals, often the month-end.

2

What is the balance b/d?

The account balance at the start of the next period.

3

What does the balance of an account tell us?

The balance of an account tells us info. such as:

The amounts of
1. sales
2. purchases
3. expenses

Together with amounts of Assets & Liabilities.

4

What does the accounting equation always do?

It always balances.

5

What is expenditure classified between?

Expenditure is classified between capital & revenue expenditure.

6

What is income classified between?

Income is classified between capital income and revenue income.

7

What is the accounting equation another way of understanding?

The accounting equation is another way of understanding double-entry book keeping.

It shows how the dual aspect of book-keeping relates to the accounts.

8

Book-keeping system: Why is it important to classify capital & revenue expenditure correctly?

In the book-keeping system, it is important to classify capital & revenue expenditure & income correctly

so as not to show a false position.