Accounting

QB1501: Introduction to Accounting

Financial Accounting – Tutorial 2 (answers will be discussed in week 3)

Question 2.1

The following is a list of typical business transactions.

1. Record which account should be Debited and which Credited; and
2. In the “?” column record whether there is an increase or decrease in Assets, Liabilities, Income, Capital or Expenses (e.g “A↑” or “L↓” etc...)

	DEBIT	?	CREDIT	?
Owner investment (paid into Bank)	Bank	A↑	Capital	C↑
Buy a motor vehicle (paid with bank card)
Cash sales
Credit sales (customer pays later)
Purchases (paid for by the bank card)
Paid council tax by cash
Received Loan (paid into Bank)
Paid rent using a cheque
Paid telephone bills (by Direct Debit)
Cash received for credit sales
Pay for credit purchases (by bank card)
Deposit cash in the bank account
Sold a non-current asset for cash
Owner withdraws cash for own use (drawings)
Repaid part of loan back to bank

Question 2.2

1. Record which account should be Debited and which Credited; and write the journal

(One example is given)

1. Bought goods for resale from LEVON (a supplier) on credit £1,500
2. Paid MOON (a supplier) £1,000 (cheque) for good bought in September
3. Credit sales of £4,750 was made
4. Paid rent £500 and shop expense £750 by cheque
5. Paid LEVON (a supplier) £1,500 (cash) for goods purchased
6. Owner withdraws £1,000 from bank for personal use
7. Owner pays £950 for personal home computer
8. MOON is paid the £1,000 reminder of their balance by cheque
9. A further £2,250 sales were made (all cash)
10. A computer was bought, £500 paid cash
• Dr Inventory account

Cr. Accounts payable account

		Assets	Expenses		Liabilities	Capital	Income
1		↑ Inventory £1,500		=	↑ Account Payable £1,500
2				=
3				=
4				=
5				=
6				=
7				=
8				=
9				=
10