Introduction to Double Entry

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Presentation transcript:

Introduction to Double Entry Ms Marshall 5th Year Accounting

List what you need if you are to set up a Business Ms Marshall 5th Year Accounting

Introduction to double entry For every debit entry there is a corresponding credit entry in every transaction. There are four main rules at the centre of double entry and these rules depend on you knowing: assets, liabilities, expenses and revenues (gains). Asset: Asset: something of value that you own. Current assets are short term and include bank, debtors (money owed to you) closing stock, cash, gains receivable due, expenses prepaid. Fixed assets last a long time. Typical examples include buildings, land, vehicles… Ms Marshall 5th Year Accounting

Liability: Expenses: Revenues: Liability: something a company owes. Current – short term, less than one yr e.g. bank o/d, creditors. Long term – Loans. Capital. Expenses: the day to day costs of running the business e.g.? Revenues: income, the reason the company exists! Ms Marshall 5th Year Accounting

The Rules Ms Marshall 5th Year Accounting

The rules Ms Marshall 5th Year Accounting

Double entry exercise For each of the following transactions, identify: 1) The Accounts 2) Whether they are an asset, liability, expense or revenue. 3) Whether they have increased or decreased. 4) Your debit and your credit. Ms Marshall 5th Year Accounting

Purchased goods for resale with a cheque, €1,000. Joe’s Car sales ltd Purchased goods for resale with a cheque, €1,000. Ms Marshall 5th Year Accounting

Purchased car on credit €5,000 Ms Marshall 5th Year Accounting

Paid Light & Heat by direct debit €300 Ms Marshall 5th Year Accounting

Sold car for €7,000 cash (lodged). Ms Marshall 5th Year Accounting

Bought computer €1,200, paid by cheque. Ms Marshall 5th Year Accounting

Received loan €20,000 Ms Marshall 5th Year Accounting

Sold stock on credit, €400. Ms Marshall 5th Year Accounting

Wrote off a bad debt of €200 Ms Marshall 5th Year Accounting

Received interest on savings €42. Ms Marshall 5th Year Accounting

31/12/12: Depreciation charge for Buildings for the year is €4,000 31/12/12: Depreciation charge for Buildings for the year is €4,000. Complete the depreciation and provision for depreciation accounts. Depreciation Provision for Depreciation 1/1/12 Balance b/d 25,000 Ms Marshall 5th Year Accounting