Q The Basic accounting equation is
The Basic accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a person or business. It is the foundation for the double-entry bookkeeping system. For each transaction, the total debits equal the total credits. It can be expressed as furthermore:
To find the net income we deduct _________ from total revenue.
To calculate the net goods, other expenses - including taxes - have to be deducted as well. Thus, the formula for calculating it: Total revenue - total expenses = net income. Net income, in deducting other expenses, involves more than just the most direct expenses related to the product sold.
Transfer voucher is prepared for
Non-Cash or Transfer vouchers are the documentary evidence of non-cash transactions. These vouchers are prepared to record the non-cash transactions of the business. Examples of non-cash vouchers are: Goods sold on Credit; Sale of Fixed Assets or Investment on Credit; Writing-off depreciation or Bad Debts, Returns Inward, etc.
The owner withdraws cash from the business for personal use.
- The company's asset account Cash will decrease.
- Liabilities are not involved in this transaction.
- The proprietorship's owner's equity decreases by an entry to the Drawing account. If the company is a corporation, Stockholders' Equity will decrease by an entry to Retained Earnings or to Dividends.
Payment of expenses will ______ the assets
Payment of expenses will reduce the assets. When an expense is recorded at the same time it is paid for with cash, the cash (asset) account declines, while the amount of the expense reduces the retained earnings account.
Which source of document prepared by the seller of the goods on credit
Fresh capital introduction will increase
If a cash book is prepared then there is no need to prepare the _______
When cash book is prepared, there is no need to prepare cash account because question of recording credit transactions does not arise, as it records only cash transactions. Hence, the balances of cash book are directly entered in the trial balance.
Return of goods purchased on credit to the suppliers will be entered in ____ Book.
Items owned by a business that have monetary value are ____