Doubleentry Bookkeeping Ledgers : An Introduction

1
Double-entry Book-keeping (Ledgers) An
Introduction

• Accounting

2
Objectives

• Purpose of double-entry book-keeping
• Format
• Debit
• Credit
• The effect of a debit or credit entry
• Balancing of ledgers
• The Trial balance

3
Introduction

• Effect of transactions?
• Assets, liabilities, revenue and expenses?
• Ledgers developed

4
Ledgers

• Two sides
• Debit (Dr)
• Credit (Cr)

5
The Effect of a Debit or Credit Entry
6
The Duality Concept in Action

• To ? Asset or Expense Debit
• To ? Asset or Expense Credit
• To ? Liability or Revenue Credit
• To ? Liability or Revenue Debit
• Each transaction always has two effects

7
What to Note About Ledger Accounts

• Cross referencing
• Debit
• Credit
• Differing ledgers transaction
• Purchase Ledger
• Sales Ledger
• Salaries Wages

8
The Balancing of Ledger Accounts

• Monies outstanding
• Debtors Creditors etc
• Example (Debtor D. Knight)
• 01/08/98 Sales 158.00
• 15/08/98 Sales 206.00
• 30/08/98 Sales 118.00
• 28/08/98 Bank 158.00
• Amount outstanding - the balance?

9
The Trial Balance

• Checking device
• Debit Credit
• A list of balances
• Provides
• Accuracy of the recording process
• Basis for TPL and Balance sheet

10
What the Trial Balance Does Not Show

• Errors of Omission
• Errors of Commission
• Errors of principle
• Errors of original entry
• Compensating errors
• Errors of reversal

11
Summary

• Recording of transactions in the ledger accounts
• Debit Credit (Duality)
• Balancing
• Trial Balance