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FA2 Lecture 6 Double Entry Bookkeeping

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24 views22 pages

FA2 Lecture 6 Double Entry Bookkeeping

Uploaded by

NationBroz Clan - Nak - Kati
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Lecture 6

Double Entry Bookkeeping

Required Reading:
Accounting Cycle
Transactions

Source documents

Books of prime entry

General Ledger

Trial Balance

Financial Statements
Cash Trade Payables

Capital

Purchases Rent

Car
Electricity

Trade Receivable

Drawing Sales
T Account
Account Name

Debit Side
Credit Side

4
Ledger is a collection of accounts.

Account is a collection of transactions.


Steps to use double entry

1. Define the accounts that will be affected by the transaction(sale,

purchase)

2. Define the nature of those account (Income, Expense, Asset, and

Liability)

3. Use the rule

4. Make entries
1. Define the accounts that will be affected

The most common accounts, u are likely to face are:


-Sales
-Purchases
-Cash
-Receivable
-Payable
-Expense (Rent, electricity, water…)
-Capital
-Non-current asset
2. Define the nature of those accounts

-Sales: income
-Purchases: expense
-Cash: asset
-Receivable: asset
-Payable: liability
-Expense (Rent, electricity, water…)
-Capital: liability
-Non-current asset (car, van, building): asset
3. Use the rule
Expense: Dr when increase; Cr when decrease
Asset: Dr when increase; Cr when decrease

Income: Dr when decrease; Cr when increase


Liability: Dr when decrease; Cr when increase

4. Make Entry

•
Transactions

1. Sophal started a phone shop by investing $50,000


into the business

Dr Cash
$50,000
Cr Capital
$50,000

2. He spent $10,000 on store renovation

Dr Store Renovation
$10,000
Cr Cash
Transactions

3. He bought a computer costing $2,000 to be used at


the store.

Dr Computer
$2,000
Cr Cash
$2,000
Transactions
4. He purchased phones to resell for $20,000 on
credit from a local distributor

Dr Purchase
$20,000
Cr Payable
$20,000

5. A month later, he paid the local distributor by bank


transfer of $20,000

Dr Payable
$20,000
Transactions

6. He bought phones accessories by cash for $5,000

Dr Purchase
$5,000
Cr Cash
$5,000
Transactions
7. During the first month of the business, he made total
sale of $10,000. All customers paid immediately.

Dr Cash
$10,000
Cr Sale
$10,000
Transactions
8. He paid $150 for electricity and $50 for internet.

Dr Electricity Expense
$150
Dr Internet Expense
$50
Cr Cash
$200

9. He has two sale assistants. Their monthly salary is


$300 each. Sophal already paid them.

Dr Salary Expense
Transactions

10. His phone shop is located at Depo market. The


monthly rent is $1,500, which was already paid.

Dr Rent Expense
$1,500
Cr Cash
$1,500
Transactions
11. He went out to have dinner with his sale assistants.
The bill was $70.

Dr Sundry Expense
$70
Cr Cash
$70

12. He bought some bottled water to serve his customers.


he paid $20

Dr Sundry Expense
Practice
Practice

1. Sopheap started a cafe shop by investing $100,000


into the business

2. He spent $80,000 on store renovation

3. He bought a POS system costing $3,000 to be used


at the store
Practice

4. He purchased some ingredients for $10,000 on


credit from a local distributor

5. A month later, he paid the local distributor by bank


transfer of $10,000

6. He bought some packaging by cash for $10,000


Practice
7. During the first month of the business, he made total
sale of $15,000. All customers paid immediately.

8. He paid $500 for electricity and $300 for internet.

9. He has two barista, two waiters and 1 cashier. Their


monthly salary is $250 each. Sophal already paid them.
Practice

10. His cafe shop is located at BKK1. The monthly rent is


$2,500, which was already paid.

11. He went out to have a party with his sale staff. The bill
was $270.

12. During the month, the cafe machine broke down. He


paid $50 to fix it.

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