ACCOUNTING SAC 1 2025
Double entry accounting - answer A system that records at least two effects on the
accounting equation as a result of each transaction
Rules of double-entry accounting - answer1. Every transaction will affect at least two
items in the the accounting equation
2.The accounting equation must always balance
Ledger account - answerAn accounting record showing all the transactions that affect a
particular item
General ledger - answerThe collective name for the main group of ledger accounts
Purpose of general ledger - answer When taken together the accounts in the general
ledger sort, classify and summaries financial data to transform it into information that
can be used in accounting reports. it is allows for changes s to the accounting equation
to be recorded, without requiring that the accounting equation be re-written every time
RULES FOR DOUBLE-ENTRY RECORDING IN LEDGER ACCOUNTS: - answer1.
Every transaction must be recorded in at least two ledger accounts
2. Every transaction must be recorded on the debit side of at least one ledger account
and on the credit side of at least another account
3.A = L + OE after every equation
The cross reference - answerThe name of the other account affected by a transaction,
so that both accounts affected by a particular transaction can be identified
Explain the importance of a cross-reference when recording transactions in ledger
accounts - answerA cross reference is the name of the other account affected by a
transaction. It aids in identifying and tracking both effects of each transaction which
ensures that a double-entry has been recorded properly
Analysing chart - answerA tool used to identify the steps for recording transactions in
the general ledger
Footing - answerAn informal process used to determine the balance of a ledger account
Trial balance - answerA list of all the accounts in the general ledger, and their balances,
to determine if total debits equal total credits
, Purpose/benefits of trial balance - answerA trial balance is a list of all the accounts in
the general ledger, and their balances, to act as a double-checking mechanism to
ensure that recorded entries debits and credits equal, thus ensuring a balanced
accounting equation
This will allow business to correct errors which will improve the accuracy of information
in reports
Errors revealed - if trial balance does not balance - answer-Two entries have been
recorded on the same side of the general ledger (e.g two debits)
-Only one entry has been recorded (one debit without corresponding credit)
-Different amounts have been recorded on each side (give example)
Errors may be present in ledger account even when trial balance balances: - answer-
Transaction has been omitted altogether
-The debit and credit entries have been reversed (give example)
-The transaction has been recorded in the wrong ledger accounts
-An incorrect amount is recorded on both sides of the ledger
Balancing - answerRuling off an asset, liability or owner's equity account to determine
its balance at the end of the current period and transferring that balance to the next
period
Why balance accounts? - answerHelps ensure relevance in the balance sheet, as only
the accurate and up-to date figures from the end of the period which might make a
difference to decision-making are reported
We have to balance accounts to show the business is following the period assumption
in by preparing reports for a particular period of time in order to compare results and
show that the asset has a 'future economic' and the liability has a 'present obligation' at
the beginning of each new reporting period. By balancing the accounts and thus
carrying the remaining amount forward we are making a distinction between assets that
will provide a benefit to the future reporting periods and liabilities that are a present
obligation of the business
BALANCING VS FOOTING - answerBoth involve calculating the balance of an account
differences:
-Balancing is done only at the end of the period, whilst footing can be done to any
account at any time to determine its balance
Double entry accounting - answer A system that records at least two effects on the
accounting equation as a result of each transaction
Rules of double-entry accounting - answer1. Every transaction will affect at least two
items in the the accounting equation
2.The accounting equation must always balance
Ledger account - answerAn accounting record showing all the transactions that affect a
particular item
General ledger - answerThe collective name for the main group of ledger accounts
Purpose of general ledger - answer When taken together the accounts in the general
ledger sort, classify and summaries financial data to transform it into information that
can be used in accounting reports. it is allows for changes s to the accounting equation
to be recorded, without requiring that the accounting equation be re-written every time
RULES FOR DOUBLE-ENTRY RECORDING IN LEDGER ACCOUNTS: - answer1.
Every transaction must be recorded in at least two ledger accounts
2. Every transaction must be recorded on the debit side of at least one ledger account
and on the credit side of at least another account
3.A = L + OE after every equation
The cross reference - answerThe name of the other account affected by a transaction,
so that both accounts affected by a particular transaction can be identified
Explain the importance of a cross-reference when recording transactions in ledger
accounts - answerA cross reference is the name of the other account affected by a
transaction. It aids in identifying and tracking both effects of each transaction which
ensures that a double-entry has been recorded properly
Analysing chart - answerA tool used to identify the steps for recording transactions in
the general ledger
Footing - answerAn informal process used to determine the balance of a ledger account
Trial balance - answerA list of all the accounts in the general ledger, and their balances,
to determine if total debits equal total credits
, Purpose/benefits of trial balance - answerA trial balance is a list of all the accounts in
the general ledger, and their balances, to act as a double-checking mechanism to
ensure that recorded entries debits and credits equal, thus ensuring a balanced
accounting equation
This will allow business to correct errors which will improve the accuracy of information
in reports
Errors revealed - if trial balance does not balance - answer-Two entries have been
recorded on the same side of the general ledger (e.g two debits)
-Only one entry has been recorded (one debit without corresponding credit)
-Different amounts have been recorded on each side (give example)
Errors may be present in ledger account even when trial balance balances: - answer-
Transaction has been omitted altogether
-The debit and credit entries have been reversed (give example)
-The transaction has been recorded in the wrong ledger accounts
-An incorrect amount is recorded on both sides of the ledger
Balancing - answerRuling off an asset, liability or owner's equity account to determine
its balance at the end of the current period and transferring that balance to the next
period
Why balance accounts? - answerHelps ensure relevance in the balance sheet, as only
the accurate and up-to date figures from the end of the period which might make a
difference to decision-making are reported
We have to balance accounts to show the business is following the period assumption
in by preparing reports for a particular period of time in order to compare results and
show that the asset has a 'future economic' and the liability has a 'present obligation' at
the beginning of each new reporting period. By balancing the accounts and thus
carrying the remaining amount forward we are making a distinction between assets that
will provide a benefit to the future reporting periods and liabilities that are a present
obligation of the business
BALANCING VS FOOTING - answerBoth involve calculating the balance of an account
differences:
-Balancing is done only at the end of the period, whilst footing can be done to any
account at any time to determine its balance
