Chapter 4 Introduction to the Ledger Accounts

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Presentation transcript:

Chapter 4 Introduction to the Ledger Accounts

Recording Transactions Via the Double Entry System ALL transactions eventually make their way into Ledger Accounts (also referred to as "T" Accounts). A Ledger Account looks like this

Recording Transactions Via the Double Entry System Date Details $ DEBIT SIDE CREDIT SIDE

Recording Transactions Via the Double Entry System The ledger account has two sides – a debit side on the left and a credit side on the right. On each side there are columns for the transaction date, value, and details. It collects all the transactions that are of a similar nature.

Recording Transactions Via the Double Entry System For example The bank account will contain all transactions that either caused the bank balance to be increased or decreased. The motor vehicle account will contain all transactions that either caused the cost of all vehicles to go up or to go down.

Recording Transactions Via the Double Entry System There are separate rules of double entry for recording transactions related to: Assets Capital Expenses Liabilities Revenue

Recording Transactions Via the Double Entry System Account type To record Increases Decreases GO TO THE SIDE INDICATED ASSETS DEBIT (DR) CREDIT (CR) LIABILITIES CAPITAL REVENUE EXPENSES