The Accounts of the General Ledger BALANCE SHEET SECTION DEBIT (DR) CREDIT (CR) CAPITAL DRAWINGS ASSETS INCOME EXPENSES NOMINAL SECTION LIABILITIES + - Wamark Publishers © - -

Transaction: Rendered a service and is receiving a delayed payment i.e. Current Income R 500 Assets Income Expense DR Debtors Control (A) CR DR Current Income (I) CR Current Income 500 Debtors Control 500 Effect on Accounting Equation Debtors Control is an Asset which increases when a service is rendered without being paid immediately Current Income is an Income which increases Owners Equity A = O/E + L = Wamark Publishers ©

Transaction: Credit Sales R 200, cost price R150 Assets Income Expenses Liabilities DR Debtors Control (A) CR DR Sales (I) CR DR Trading Inventory (A) CR DR Cost of Sales ( E) CR Trading Inventory 150 Cost of sales 150 Sales 200 Debtors Control 200 Effect on Accounting Equation Debtors Control is an Asset that increases when a sale is made. Sales is an income. An income increases Owner’s Equity. A = O/E + L = Trading Inventory is an Asset which decreases when goods are sold. Cost of Sales (Cost Price) is an Expense which decreases Owner’s Equity A = O/E + L = What is the profit in Rands? Wamark Publishers ©

Transaction: Purchase stock on Credit e.g. R700 Assets Income Expense Liabilities DR Trading Inventory (A)CR DR Creditors Control (L) CR Trading Inventory 700 Creditors Control 700 Effect on Accounting Equation Trading Inventory is an Asset which increases. Creditors Control is a Liability which increases A = O/E + L = Wamark Publishers ©

Transaction: Making use of a service and paying at the end of the month e.g. Repairs R 700 Assets Income Expense Liabilities DR Repairs (E) CR DR Creditors Control (L) CR Repairs 700 Creditors Control 700 Effect on Accounting Equation Repairs is an expense which decreases Owner’s Equity. Creditors Control is a Liability which increases A = O/E + L 0 = Note that the Accounting Equation is still balanced Wamark Publishers ©