THE DEBIT AND CREDIT RULES
1. 1.1.xx We bought goods from Waterman for an overall sum of $ 1,000 (Invoice No. 123).
2. 2.1.xx We sold part of the goods for $ 600 cash (Receipt No. 1950)
3. 3.1.xx We paid $ 200 cash for electricity expenses (Expense Voucher 001).
4. 4.1.xx We bought a store from Max for $ 20,000 (Invoice No. 953).
5. 5,1,xx We rented the store out for $ 700 cash (Invoice No.001)
We will practice making the bookkeeping records that are the subject of the above table (Comment: In the first part of the solution, the records will be presented in the form of a T account, and they will be presented textually in the second part. This will be explained more fully later on.
Textual Records (Journal Entries)
Let's go over the entries together:
The Goods Account (a real account) is debited - because an account was received (Rule 1 in the table).
The Waterman Account, (a personal account) is credited - as it is due to receive money (Rule 2 in the table).
The Cash Account (a real account) is debited - because the cash was received (Rule 2 in the table)
The Goods Account (a real account) is credited - because the warehouse issued goods (Rule 2 in the table).
The Electricity Expenses - (A profit and loss account) is debited - as every expense account is debited (Rule 3 in the table).
The Store Account (a real account) is debited - the transaction received a monetary value (Rule 2 in the table).
The Max Account (a personal account) is credited - according to Rules 1 or 2.
The Income from the Rental Account (a profit and loss account) is a credit - as all receipts are a credit (Rule 3 in the table).
The Cash Account is debited - according to Rule 2 in the table.
Comment: It is easy to remember that every expense account is debited (the expense is a negative matter from an economic point of view and it is a debt of the business).Similarly, all receipts are a credit (a credit is something positive from an economic point of view and it is to the credit of the business). An additional stage that should be emphasized is that the first part (the T - Accounts) in fact serve us as a draft for the purpose of illustrating the records. In actual fact, the bookkeeping records are only inwords, the professional term for each record being a "Journal Entry: (or a "journal voucher").
Bank Reconciliation Salaries Tax Deduction at Source Value added tax
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