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Double Entry Lect Slides

The document discusses the double entry bookkeeping method which requires that every accounting transaction is recorded twice, as both a debit and a credit. It outlines the rules for debit and credit entries for different account types like assets, liabilities, equity, expenses and revenues. T-accounts are used to illustrate the impact of transactions on different account types.

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37 views13 pages

Double Entry Lect Slides

The document discusses the double entry bookkeeping method which requires that every accounting transaction is recorded twice, as both a debit and a credit. It outlines the rules for debit and credit entries for different account types like assets, liabilities, equity, expenses and revenues. T-accounts are used to illustrate the impact of transactions on different account types.

Uploaded by

johnbaptistmukisaa091
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Double Entry

Bookkeeping
Method
Double Entry Bookkeeping Method

• Double entry bookkeeping is based on the idea that each


transaction has an equal but opposite effect. Every
accounting event must be entered in ledger accounts both
as a debit and as an equal but opposite credit.

• Ledger accounts, with their debit and credit sides, are


kept in a way which allows the two-sided nature of every
transaction to be recorded. This is known as the ‘double
entry’ system of bookkeeping, because every transaction
is recoded twice in the accounts.

2
Rules of Double Entry Bookkeeping

• Increase in an asset, we make a DEBIT entry


• Decrease in an asset, we make a CREDIT entry
• Increase in a liability, we make A CREDIT entry
• Decrease in a liability, we make a DEBIT entry
• Increase in capital, we make a CREDIT entry
• Decrease in capital, we make a DEBIT entry
• Increase in Expenses, we make a DEBIT entry
• Increase in Income, we make a CREDIT entry

3
Rules of Double Entry Bookkeeping –
Cont’d
• A debit will:
– Increase an asset
– Decrease a liability
– Increase an expense

• A credit will:
– Decrease an asset
– Increase a liability
– Increase an income

4
Rules of Double Entry Bookkeeping –
Cont’d
• The basic rule, which must always be observed, is that
every financial transaction gives rise to two
accounting entries, one a debit and the other a credit.

• The total value of debit entries in the nominal ledger is


therefore always equal at any one time to the total value
of credit entries.

• Which account receives the credit entry and which


receives the debit depends on the nature of the
transaction.

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Rules of Double Entry Bookkeeping –
T-Accounts
The Asset T-Account:

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Rules of Double Entry Bookkeeping –
T-Accounts
The Liability T-Account:

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Rules of Double Entry Bookkeeping –
T-Accounts
The Capital T-Account:

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Rules of Double Entry Bookkeeping –
T-Accounts
The Income T-Account:

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Rules of Double Entry Bookkeeping –
T-Accounts
The Expense T-Account:

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Unit 3.6

Journal Entries
Journal Entries

• A “Journal” is a book of primary entry that records


transactions by their date, the name account to be debited,
the name account to be credited and the narration of the
transaction (description/memo).
• Journals are commonly used in some of these instances
(Not exhaustive):
– Recording the purchase and sale of fixed assets on credit.
– Writing off bad debts
– The correction of errors in the ledger accounts
– The opening entries
– Any other adjustments of accounts.
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The Journal - Illustrated

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