The Double Entry System

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The Double Entry System
Mr Black sells some inventory for 400, and
receives the payment instantly.
Double Entry Book-Keeping is based upon the idea
that every transaction affects two aspects
2
The accounts for double entry
An account is a record of all transactions in
particular departments in a business.
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Capital Assets Liabilities
To increase each item CREDIT DEBIT CREDIT
To decrease each item DEBIT CREDIT DEBIT
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The accounts for double entry

• If a business buys stationary valued at 40 and
  pays for it using cash, then two things have
  happened.
• The value in the businesss cash account will
  have decreased by 40
• The value in the businesss stationary account
  has increased by 40

Example Paid cash for a van costing 3,000 Van
comes IN to the Business (debit the van
account) The cash goes OUT of the business
(credit the cash account)
IN
OUT
Dr
Cr
5
The accounts for double entry
Example Paid cash for a van costing 3,000 Van
comes IN to the Business (debit the van
account) The cash goes OUT of the business
(credit the cash account)
VAN account
Cash account
Dr
Cr
Dr
Cr
Cash 3,000
Van 3,000
The owner starts the business with 10,000 in
cash.
Cash account
Capital account
Dr
Cr
Dr
6
Equipment is bought on credit from B.B Company
for 1,250
Equipment account
B.B Company account
Dr
Cr
Dr
Cr
You have paid the B.B Company the 1,250.
B.B Company account
Cash account
Dr
Cr
Dr
Cr
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Now complete the double accounting work sheet
Cut the margins Stick in book
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Homework Make and complete accounts using the
following information. Jan 1 Started Business
with 30,000 in bank Jan 5 Bought stock of
goods paying 2,770 cheque Jan 7 Bought a van,
4,800 cheque Jan 9 Sold goods for 680
cash Jan 10 - Bought desk chair for the office
for 110 cash Jan 15 Sold goods for 500
cheque Jan 22 - Paid 92 cash for motor expenses
Jan 29 Sold goods for 325 cash Jan 30 Bought
more goods, paid 1090 cheque
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