Chapter 4 Introduction to the Ledger Accounts

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Chapter 4Introduction to the Ledger Accounts
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Recording Transactions Via the Double Entry
System

• ALL transactions eventually make their way into
  Ledger Accounts (also referred to as "T"
  Accounts). A Ledger Account looks like this

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Recording Transactions Via the Double Entry
System
               
Date Details Details Date Details Details
   
DEBIT SIDE   CREDIT SIDE  
 
 
 
 
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Recording Transactions Via the Double Entry
System

• The ledger account has two sides a debit side
  on the left and a credit side on the right. On
  each side there are columns for the transaction
  date, value, and details. It collects all the
  transactions that are of a similar nature.

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Recording Transactions Via the Double Entry
System

• For example
• The bank account will contain all transactions
  that either caused the bank balance to be
  increased or decreased.
• The motor vehicle account will contain all
  transactions that either caused the cost of all
  vehicles to go up or to go down.

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Recording Transactions Via the Double Entry
System

• There are separate rules of double entry for
  recording transactions related to
• Assets Capital
• Expenses Liabilities
• Revenue

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Recording Transactions Via the Double Entry
System
Account type Account type To record To record To record To record
Account type Account type Increases Increases Decreases Decreases
Account type Account type GO TO THE SIDE INDICATED GO TO THE SIDE INDICATED GO TO THE SIDE INDICATED GO TO THE SIDE INDICATED
ASSETS ASSETS DEBIT (DR) DEBIT (DR) CREDIT (CR) CREDIT (CR)
           
LIABILITIES LIABILITIES CREDIT (CR) CREDIT (CR) DEBIT (DR) DEBIT (DR)
           
CAPITAL CAPITAL CREDIT (CR) CREDIT (CR) DEBIT (DR) DEBIT (DR)
           
REVENUE REVENUE CREDIT (CR) CREDIT (CR) DEBIT (DR) DEBIT (DR)
           
EXPENSES EXPENSES DEBIT (DR) DEBIT (DR) CREDIT (CR) CREDIT (CR)