BOOKKEEPING BASICS
What is the difference between accounting and bookkeeping? - Answer- A bookkeeper's job is to record transactions in the books of an entity. An accountant's job is to use the information given by bookkeepers to prepare financial statements.
What is double-entry bookkeeping?...
BOOKKEEPING BASICS
What is the difference between accounting and bookkeeping? - Answer- A
bookkeeper's job is to record transactions in the books of an entity. An accountant's
job is to use the information given by bookkeepers to prepare financial statements.
What is double-entry bookkeeping? and why is it used? - Answer- Double-entry
bookkeeping is a bookkeeping system that records each transaction twice. This is by
displaying a positive and negative financial effect. This means that positives should
equal negatives in the end making it far easier to identify any errors.
What is a ledger? - Answer- A ledger (usually referred to as the general or nominal
ledger) is a book or computer system that contains a number of accounts, each
having a 'debit' and a 'credit' side, which are used to record each transaction.
Why is it important for an accountant to understand bookkeeping? - Answer- The
accounts in the ledger are used to create the financial statements. The bookkeeping
system gives a more detailed overview of how the figures on the financial statements
are made. The accountant will need to look at and understand the books in order to
check for and most likely make adjustments.
What is the 'dual aspect concept'? - Answer- The dual aspect concept is that each
transaction has 2 effects, as a transaction means that there is a loss from
somewhere (one account) in order for there to be a gain elsewhere (another
account). Double-entry bookkeeping uses this concept by recording the movement of
the transaction.
What determines whether an account should be debited or credited in a transaction?
- Answer- The account credited is the account where the money comes from. The
account that money goes to is then debited.
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