Question

CHAPTER 2
Q.1 Answer in one sentence only.
1. What is Double Entry System?
2. What is an Account?
3. State the meaning of Single Entry System.
4. What is Personal Account?
5. State the rule of Nominal Account.
6. Give two examples of intangible assets?
7. State the meaning of Real Account.
8. Give two examples of income and gains.
9. State the rule of Personal Account
10. How many methods of recording accounting information are there?

Answer 1

1). The double-entry system of accounting or bookkeeping means that for every business transaction, amounts m koust be recorded in a minimum of two accounts.

2). In accounting, an account is a record in the general ledger that is used to sort and store transactions.

3). Single entry system is an incomplete form of recording financial transactions. It is the system, which does not record two aspects or accounts of all the financial transactions.

4). A personal account is an account for use by an individual for that person's own needs.

5). The rule related to nominal account states that debit all expenses and losses, credit all incomes and gains.

6). Examples of intangible assets include goodwill, brand recognition, copyrights, patents, trademarks, trade names, and customer lists.

7). A real account is a general ledger account that does not close at the end of the accounting year.

8). example of income : 1) Rent receivable from renting out the business premises when business owns property in excess of its own requirements.(2) Commission receivable from selling other people’s goods or rendering services to others.

Examples of gain are : Gain on sale of investments. Gain on sale of building.

9). The rule related to Personal account states debit the receiver and credit the giver. In other words, if a person receives something, receiver's account shall be debited and if a person gives something, giver's account shall be credited.

10). The two primary methods are accrual accounting and cash accounting. Cash accounting reports revenue and expenses as they are received and paid; accrual accounting reports them as they are earned and incurred.