jump to content of this page Bized logo linked to homepage
You are here: Home > Learning Materials > Accounting > Accounting Information Systems > Book-Keeping and Accounting Interactive Tutor > Double Entry For Assets And Liabilities, Revenues And Expenses

Learning Materials
Bookmark and Share

Advanced

Interactive worksheet: Double Entry For Assets And Liabilities, Revenues And Expenses

by Ken Delaney-Moore, Sheffield Hallam University

Aims:

This worksheet deals with:

  1. The difference between capital and revenue expenditure
  2. The double-entry for assets and liabilities
  3. The double-entry for expenses and revenues

After having completed the worksheet you should be better able to understand these points. When you are done, please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you.


Introduction

In the previous worksheet ('The accounting equation') you may have noticed how the balance sheet changed appearance every time there was a transaction. In the real world it is simply not practical to re-write the balance sheet every time a transaction occurs; so we keep a separate account (page of detail) for every item you might find on the balance sheet. If we need to draw-up a balance sheet, we simply write - down the latest values (known as 'balances') on each account and arrange them into balance sheet order.

Q1. Fill-in the gaps below:


(Type your answer)




In book-keeping, the words 'debit' and 'credit' have different meanings to their everyday commercial and banking usage.


The meaning of 'debit' and 'credit'

Q2. Fill-in the gaps in the following from your studies so far (or guess!) : there's one mark for each correct entry.


(Type your answer)





The difference between 'capital' and 'revenue' items

Items bought in order to last in the business for more than one year are regarded as long-term and are given the name capital expenditure. Day-to-day 'running' expenses are more short-term (i.e. the benefits will not last very long). This is revenue expenditure. In a similar way, income from occasional sources is a capital receipt, whereas money received from regular sources is a revenue receipt.

Q3. Now you're going to see if you can classify items according to type. Fill-in the gaps in the following according to your studies and your common-sense. There's one mark per correct answer plus one bonus mark for getting them all.


(Type your answer)





The double-entry rules:

Q4. Now try to fill-in the gaps in the following, preferably from your studies so far; but don't be put off from attempting these at all since you have a 50% chance on each one. There's one mark for each correct entry with a bonus mark if you get them all.


(Type your answer)





A double-entry exercise

Q5. Now let's look at the transactions of 'Crosspool Bicycles' that occurred in the previous work-sheet. In each case, try to name the correct account.. Note that when stock is bought for re-sale, we use a 'purchases' account rather than a 'stock' account (see below as to why).


(Type your answer)


Note also that where the box of possible answers indicates the use of capital letters, then you should put these capitals in your answer; otherwise it will be marked incorrect


Stock is a special case

You will have noticed from the above that we did not use a 'stock' account to record the purchase of bicycles for re-sale. This is because we cannot record the buying and selling of stock on a single account. The reason for this is that stock is bought and sold at different prices (normally). Consequently we have an account for 'purchases' of stock and one for 'sales' of stock. Since stock is an asset, both the purchases account and the sales account obey the rule for assets (increases are recorded as debits, reductions as credits).

This means that you will find that the purchases account normally contains only debits, and the sales account normally contains only credits. Even 'returns' (stock returned to the supplier, or from customers) are normally recorded on separate accounts.


Further double entry exercises

Q6. Having read the last section, try to fill-in the gaps in the following:


(Type your answer)




s Now please fill-in the on-line evaluation form in order for us to monitor the quality of the materials we provide for you. Tell us what we're doing right and wrong. It takes very little time, and your opinions are valued - thank you.
You should now be in a position to attempt "Accounting Principles assessment number 1"

Contents