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Bsbfia401 2

The document explains the basic principles of double entry bookkeeping including debit and credit entries for transactions and the accounting equation. It also describes the three golden rules of accounting - debit the receiver and credit the giver, debit what comes in and credit what goes out, and debit expenses and losses and credit incomes and gains. The purpose of the general journal is explained as recording transactions that do not fit in other specialized journals. Examples given are opening entries and purchase of non-current assets on credit. The general ledger is used to sort and store balance sheet and income statement transactions, with examples being accounts receivable, inventory and accounts payable. Fair value under accounting standards is defined as the exchange amount between willing

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50 views2 pages

Bsbfia401 2

The document explains the basic principles of double entry bookkeeping including debit and credit entries for transactions and the accounting equation. It also describes the three golden rules of accounting - debit the receiver and credit the giver, debit what comes in and credit what goes out, and debit expenses and losses and credit incomes and gains. The purpose of the general journal is explained as recording transactions that do not fit in other specialized journals. Examples given are opening entries and purchase of non-current assets on credit. The general ledger is used to sort and store balance sheet and income statement transactions, with examples being accounts receivable, inventory and accounts payable. Fair value under accounting standards is defined as the exchange amount between willing

Uploaded by

natty
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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BSBFIA401 2

 
1. Explain the basic principles of double entry bookkeeping.
·         In the double-entry accounting system, at least two accounting are
required to record each financial transaction,These entries may occur
in asset, liability, equity, expense or revenue account.
·         Recording of a debit amount to one or more accounts and an equal
credit amount to one or more accounts results in total debits being
equal to total credits for all accounts in the general ledger.if the
accounting entries are recorded without error,the aggregate balance of
all accounts having Debit balances will be equal to the aggregate
balance of all account having Credit balances.

2. Explain the three golden rules of accounting and how they apply to double
entry accounting? 
            1.Debit the Receiver,Credit The Giver
·         This principle is used in the case of personal accounts ,When a
person gives something to the organization,it becomes an inflow and
therefore the person must be credit in the books of accounts.The
converse of this is also true,which is why the receiver needs to be
debited,accounts,The converse of this is also true,which is why the
receiver needs to be debited,
         2.Debit What Comes in,Credit What Goes Out
·         This principle is applied in case of real accounts.Real accounts
invoice machinery,land and building etc,They have a debit balance by
default,Thus,when you debit what come in,you are adding to the
existing account balance,This is exactly what needs to be
done,Similarly,when you credit what goes out,you are reducing the
account balance when a tangible asset goes out of the organization.
         3.Debit All Expenses and Losses,Credit All incomes and Gains
·         This rule is applied when the account in question is a nominal
account,The capital of the company is a liability,Therefore,it has a
default credit balance,When you credit all incomes and gains,you
increase the capital.
This is exactly what needs to be done for the system to stay in balance.
 

3. Explain the purpose of a general journal in accounting and give at least two
examples of transactions that may be recorded in this journal. 
·         The general journal is used to record transactions that do not fit in
specialist journals such as the cash receipts journal,the cash payments
journal,the sales journal and the purchases journal.
·         The format of the general journal provides a guide for posting to the
general ledger.If identifies the accounts to be debited and credited and
then gives a brief explanation of the transaction.
·         Examples of transactions that may be recorded include
-Opening entries i.e those entries that record the assets,
liabilities and equity to start the accounting system of business.
-Purchase of non-current assets on credit,for example,purchase
of furniture on credit
-Business owner’s contribution of capital in assets other than
cash to the business (or drawings of an asset other than cash).For
example,the owner contributing their own computer or office furniture
the the business)or contributing capital in the form of cash.
 

4. Explain the purpose of a general ledger in accounting and give at least two
examples of transactions that may be recorded in this journal.
·         The general ledger is used to sort and store balance sheet and
income statement transactions.
·         Examples of transactions that may be recorded (both assets and
liabilities) include
·         Accounts receivable
·         Inventory
·         Accounts payable
 

5. Describe what is meant by “Fair Value” under AASB 116. 


Fair value is defined as the amount for which an asset could be exchanged, or a
liability settled, between knowledgeable, willing parties in an arm’s length
transaction.

6. When working as an accountant you will spend many hours seated at your
desk and at the computer, possibly doing lots of data entry. List three OHS
issues you might need to consider, ensuring you are working safely and are
not at risk of accident, injury or illness. 
OHS issues:
-Ergonomics issues such as design of workstation adjustable chair, monitor risers,
adjustable keyboards, ergonomic mice.
-Cables and electrical  wires; to avoid trips and falls issues
-Taking regular rest breaks to avoid fatigue, headache, headache, eye strain, back
pain

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