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    The Double Entry System

    Uploaded by

    Zain Cruise
    Mr. Black sells some inventory for £400 and receives instant payment. This transaction affects two aspects in double entry bookkeeping: 1) Cash at bank increases by £400 as Mr. Black receives payment, and 2) Inventory decreases by £400 as the items are sold. The document then provides an example transaction of paying £3,000 cash for a van. The van account is debited £3,000 to record the van coming into the business, and the cash account is credited £3,000 to record the cash going out of the business. Finally, the document instructs on completing a double entry accounting worksheet using sample business transactions over a month.

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    The Double Entry System

    Uploaded by

    Zain Cruise
    32 views9 pages
    Mr. Black sells some inventory for £400 and receives instant payment. This transaction affects two aspects in double entry bookkeeping: 1) Cash at bank increases by £400 as Mr. Black receives payment, and 2) Inventory decreases by £400 as the items are sold. The document then provides an example transaction of paying £3,000 cash for a van. The van account is debited £3,000 to record the van coming into the business, and the cash account is credited £3,000 to record the cash going out of the business. Finally, the document instructs on completing a double entry accounting worksheet using sample business transactions over a month.

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    The Double Entry System.ppt

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    The Double Entry System.ppt

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    Mr. Black sells some inventory for £400 and receives instant payment. This transaction affects two aspects in double entry bookkeeping: 1) Cash at bank increases by £400 as Mr. Black receives payment, and 2) Inventory decreases by £400 as the items are sold. The document then provides an example transaction of paying £3,000 cash for a van. The van account is debited £3,000 to record the van coming into the business, and the cash account is credited £3,000 to record the cash going out of the business. Finally, the document instructs on completing a double entry accounting worksheet using sample business transactions over a month.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    32 views9 pages

    The Double Entry System

    Uploaded by

    Zain Cruise
    Mr. Black sells some inventory for £400 and receives instant payment. This transaction affects two aspects in double entry bookkeeping: 1) Cash at bank increases by £400 as Mr. Black receives payment, and 2) Inventory decreases by £400 as the items are sold. The document then provides an example transaction of paying £3,000 cash for a van. The van account is debited £3,000 to record the van coming into the business, and the cash account is credited £3,000 to record the cash going out of the business. Finally, the document instructs on completing a double entry accounting worksheet using sample business transactions over a month.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 9

    The Double Entry System

    Mr Black sells some


    inventory for 400, and
    receives the payment
    instantly.

    Assets
    Cash at bank
    Shop
    Inventory
    Account
    receivable
    Account
    payable
    Capital

    28,000
    32,000
    6,400
    600
    (7,000)

    60,000
    60,000

    Double Entry Book-Keeping


    is based upon the idea that
    every transaction affects
    two aspects

    Assets
    Cash at bank
    Shop
    Inventory
    Account receivable
    Account
    payable
    Capital

    28,400
    32,000
    6,000
    600
    (7,000)

    60,000
    60,000

    The accounts for double entry

    An account is a record of all transactions in particular


    departments in a business.

    Capital

    Assets

    Liabilities

    To increase each
    item

    CREDIT

    DEBIT

    CREDIT

    To decrease each
    item

    DEBIT

    CREDIT

    DEBIT

    The accounts for double entry


    If a business buys stationary valued at 40 and pays for it using cash, then
    two things have happened.
    1.The value in the businesss cash account will have decreased by 40
    2.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)

    Dr

    IN

    OUT

    Cr

    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
    Dr
    Cash

    Cash account
    Cr

    Dr

    3,000

    Cr
    Van

    3,000

    The owner starts the business with 10,000 in cash.

    Cash account
    Dr

    Capital account
    Cr

    Dr

    Equipment is bought on credit from B.B Company for 1,250

    Equipment account
    Dr

    B.B Company account


    Cr

    Dr

    Cr

    You have paid the B.B Company the 1,250.

    B.B Company account


    Dr

    Cash account
    Cr

    Dr

    Cr

    Now complete the double accounting work sheet


    Cut the margins
    Stick in book

    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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