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Introduction to Double Entry
Ms Marshall 5th Year Accounting
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List what you need if you are to set up a Business
Ms Marshall 5th Year Accounting
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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
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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
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The Rules Ms Marshall 5th Year Accounting
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The rules Ms Marshall 5th Year Accounting
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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
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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
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Purchased car on credit €5,000
Ms Marshall 5th Year Accounting
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Paid Light & Heat by direct debit €300
Ms Marshall 5th Year Accounting
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Sold car for €7,000 cash (lodged).
Ms Marshall 5th Year Accounting
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Bought computer €1,200, paid by cheque.
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Received loan €20,000 Ms Marshall 5th Year Accounting
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Sold stock on credit, €400. Ms Marshall 5th Year Accounting
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Wrote off a bad debt of €200 Ms Marshall 5th Year Accounting
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Received interest on savings €42.
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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
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