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Week 3 Double Entry

This document discusses the accounting recording process and double entry system. It explains that the recording process has three steps: journalizing transactions in the general journal, posting journal entries to T-accounts in the general ledger, and applying double entry rules where every transaction affects two accounts with equal and opposite entries. The double entry rules are outlined for increasing and decreasing assets, liabilities, capital, revenues and expenses.

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Nor Laily
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229 views13 pages

Week 3 Double Entry

This document discusses the accounting recording process and double entry system. It explains that the recording process has three steps: journalizing transactions in the general journal, posting journal entries to T-accounts in the general ledger, and applying double entry rules where every transaction affects two accounts with equal and opposite entries. The double entry rules are outlined for increasing and decreasing assets, liabilities, capital, revenues and expenses.

Uploaded by

Nor Laily
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Week 3

Double Entry , Documentation and Recording Process

Learning Objectives
1. The recording process / double entry rules
2. General Journal
3. General Ledger (T-Accounts)

P1
ACCOUNT
• Individual account record that shows either increase
or decrease in specific asset, liability, owner’s
equity, revenues and expenses.
• Every transaction affects two items, entry will have
to show increase or decrease of one item, another
entry will have to show increase or decrease of
another item.
• An account is a page specifically designed to record
the changes in each individual item affecting the
financial position. There is one account for each
item.
• Refer to page 64, 65
DOUBLE ENTRY
BOOKKEEPING RULES
A system where each transaction is entered twice,
one on the debit side and one on credit side of the account

Eg: Dec 31 Purchase computer by cash RM 3000

Debit - Computer a/c RM 3,000


Credit - Cash a/c RM 3,000
JOURNAL
• First step in the recording process of a business
transaction called journalizing

• Eg: Dec 31 Purchase computer by cash RM 3000

• Journal entries
Dr - Computer a/c RM 3,000
Cr – Cash a/c RM 3,000
LEDGER
• Second step in the recording process of a business
transaction called posting to ledger

• These accounts are also called T-accounts

• In recording transactions in these T-accounts, it uses


word debit to refer to the left-hand side of the
account and the word credit to refer to the right-hand
side of the account
LEDGER

THE LAYOUT OF T-ACCOUNT

ACCOUNT TITLE HERE - the top stroke of the T

This line separates the


2 side and is the down
stroke of the T
LEDGER
DOUBLE ENTRY SYSTEM FOLLOWS THE RULES OF
THE
ACCOUNTING EQUATION

TITLE OF THE ACCOUNT WRITTEN HERE


Left hand side of the page Right hand side of the page
This is the Debit side This is the Credit side
LEDGER
Eg: Dec 31 Purchase Computer By Cash RM 3000

Journal Entries
Dr - Computer A/C RM 3,000
Cr – Cash A/C RM 3,000

Cash Computer
Computer RM 3000 Cash RM 3000
In terms of assets, liabilities and capital :
• To increase an asset we make a DEBIT entry
• To decrease an asset we make a CREDIT entry
• To increase a liability / capital a/c we make a CREDIT entry
• To decrease a liability / capital a/c we make a DEBIT entry

Accounts To record Entry in the


account
Assets An increase Debit
A decrease Credit
Liabilities An increase Credit
A decrease Debit
Capital An increase Credit
A decrease Debit
In terms of revenues and expenses :
• To increase an expenses we make a DEBIT entry
• To decrease an expenses we make a CREDIT entry
• To increase revenues we make a CREDIT entry
• To decrease revenues we make a DEBIT entry

Accounts To record Entry in the


account
Expenses An increase Debit
A decrease Credit
Revenues An increase Credit
A decrease Debit
DOUBLE ENTRY RULE FOR ASSET

ASSET a/c
To record increase ASSET To record decrease
ASSET

Eg : Jan 1 Bought fixtures by cash RM5,000


Journal entries
Dr. Fixtures a/c RM 5,000
Cr. Cash/Bank a/c RM 5,000
Ledger entries
DOUBLE ENTRY RULE FOR LIABILITIES
LIABILITIES a/c
To record decrease in To record increase
in LIABILITIES LIABILITIES

Eg: Jan 2 Bought fixtures by credit from Sherry RM1,000


Journal entries
Dr. Fixtures a/c RM 1,000
Cr. Creditor- Sherry a/c RM 1,000
Ledger entries
DOUBLE ENTRY RULE FOR CAPITAL
CAPITAL a/c
To record decrease in To record increase
CAPITAL in CAPITAL

Eg : Jan 1 The owner deposited cash RM20,000 into the


business
Journal entries
Dr. Cash/Bank a/c RM 20,000
Cr. Capital a/c RM 20,000
Ledger entries

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