2020 SACSS 3N POA EOY P1 Q2

2020 SACSS 3N POA EOY P1 Q2

2

REQUIRED

a. Explain what ‘double entry’ means.

[1]

b. State the double entries for the following transactions.

[6]

Date

Transaction

Account to debit

Account to credit

2020

   

Jul 1

Took a ten year loan from DBS Bank $30 000.

  

    11

Returned goods to credit supplier Bridget $530.

  

    22

Owner Qian Wen brought her own van valued at $10 000 into the business.

  

c. Analyse the effects of the following transactions on the assets, liabilities and equity. State the account affected and the amount involved clearly with a ‘+’ sign for increase and a ‘-‘ sign for a decrease. Write ‘no effect’ for the accounting element(s) not affected by the transaction.

[6]

The first transaction has been completed as an example for you.

 

Transaction 

Effect on

  

Assets

Liabilities

Equity

Eg

Bought goods on credit  $10 000

Inventory + $10 000

Trade payables + $10 000

No Effect

(i)

Owner Qian took goods for her personal use $150.

 

  

(ii)

Paid supplier $2000 by cheque. 

 

  

(iii)

Banked in cash $3000.

 

  

[TOTAL 13]

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Double entry means that every transaction is recorded in two accounts  – with one amount on the debit side of one account and the same amount on the credit side of another account.

 

 

Transaction 

Effect on

  

Assets

Liabilities

Equity

Eg

Bought goods on credit  $10 000

Inventory 

+$10 000

Trade payable 

+ $10 000

No Effect

(i)

Owner Qian took goods for her personal use $150.

Inventory

-$150

No Effect

Drawings

-$150

(ii)

Paid supplier $2000 by cheque.

Cash at bank

-$2000

Trade payables

-$2000 √

No Effect

(ii)

Banked in cash $3000

Cash in hand

-$3000

Cash at bank

+$3000

No Effect

No Effect

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