In the Name of ALLAH, Most

Gracious, Most Merciful.

 Presentation
By
Malik Irfan Haider
MBA 1
09P0011
Double Entry Book keeping
System
In double entry bookkeeping, at
least two accounts are impacted by
each transaction, one of those
entries must be a debit and the
other entry must be a credit of
equal amount.

To complicate things further, more

than two accounts can be used if
the transaction is split among them,
as long as the sum of debits for the
transaction equals the sum of
credits
 Where the double entry
bookkeeping system can help?
- it provides a system of checks and balances.
By adding up all of the debits and adding up all of the
credits and comparing the two, When debits and credits
don't match - the "double entry bookkeeping" system
loudly tells you something is wrong and needs correction.
(meaning the debits and credits don't match)
Confusion over Debits And
Credits
You might be confused because you considered
that credit is a good thing!
We learned these terms after dealing with banks
and stores, but they were using these terms from
their own perspective.
To avoid confusion over debits and credits, don't
assume them in the way they are used in
everyday language.
When you put cash in the bank, the bank now is
obliged to pay it back to you, which is a liability
and therefore a credit (increase) of their liability to
you. So the teller tells you your account has been
"credited".

As a business owner, think of debits and credits

from your company's point of view. When you debit
your Cash, you add to it. When you credit your
Cash, you subtract from it.
 See how this can get confusing now?
 See how the two of you, your company and the bank
mirror image each other?

The "credit" from the viewpoint of the bank is, in fact a

debit from your business point of view.
But this confusion can be eliminated by remembering
the basic concept. Debit refers to the left ; credit
refers to the right.
QUESTION????