Recording: Double-entry book keeping
‘Old accountants never die, they just lose their balance.’
After completing this chapter you should be able to:
- Outline the accounting equation.
- Understand double-entry bookkeeping.
- Record transactions using double-entry bookkeeping.
- Balance off the accounts and draw up a trial balance.
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- Double-entry bookkeeping is an essential underpinning of financial accounting.
- The accounting equation provides the structure for double-entry.
- Assets and expenses are increases in debits recorded on the left-hand side of the ‘T’ (i.e., ledger) account.
- Income and equity are increases in credits recorded on the right-hand side of the ‘T’ (i.e., ledger) account.
- Debits and credits are equal and opposite entries.
- Initial recording in the books of account using double-entry, balancing off and preparing the trial balance are the three major steps in double-entry bookkeeping.
- The trial balance is a listing of all the balances from the accounts.
- The debits and credits in a trial balance should balance.
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