Answered: Tibet sells goods to Dempsey Ltd, on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2. Tibet sells goods to Dempsey Ltd, on credit. Which accounts are to be debited and credited, respectively?

a) Credit Sales A/c & Debit Inventory
b) Debit Receivables A/c - Dempsey Ltd & Credit Sales A/c

c) Debit Equipment A/c & Credit Sales A/c

2. The asset - vehicle worth £21,200 will be depreciated by 10% at the end of the year. Which nominal accounts should be debited and credited, respectively?

a) Debit Depreciation A/c & Credit Non-Current Asset A/c
b) Debit Inventory A/c & Credit Depreciation A/c
c) Debit Balance Sheet A/c & Credit Profit or Loss A/c

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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