1. You are the Accountant For every exercise you do, pretend that you are the accountant for the business. Wamark Publishers ©

2. The General Ledger Format of the General Ledger Balance Sheet Section Nominal Section DEBIT DR CREDIT CR This looks like a “T” so it is also called a T account Bank B3 Stationery N4 Stationery 100 Bank 100 Double Entry Rule Wamark Publishers ©

3. The Accounts of the General Ledger BALANCE SHEET SECTION DEBIT (DR) CREDIT (CR) CAPITAL (O/E) DRAWINGS (O/E) ASSETS (A) INCOME (I) EXPENSES (E) NOMINAL SECTION + - + + + + LIABILITIES (L) + - Wamark Publishers © - -

4. Owner’s Equity (O/E) The Owner The money used to start up a business is called Capital. The owner lends the Capital to the business. The owner can increase his/her capital contribution at any time. Capital is an Owners Equity Account. The Capita l is banked into the business bank account Owner’s Equity increases when the owner makes a capital contribution Capital + Wamark Publishers ©

5. Owner’s Equity The two Owner’s Equity Accounts are: Capital and Drawings Transaction: The owner makes a capital contribution of R 20 000 Capital Drawings Assets + DR Capital (O/E) CR DR Bank (A) CR Bank 20 000 Capital 20 000 Effect on Accounting Equation Capital increases Owner’s Equity. Bank is an Asset that increases when a capital contribution is made. A = O/E + L + 20 000 = + 20 000 The owner may contribute capital as many times as he/she wishes. Wamark Publishers ©

6. Owner’s Equity (O/E) The Owner The Owner withdraws money form the business bank account for personal use - Drawings When the Owner draws money from the business bank account for his/her own personal use e.g. to go on holiday, it is called drawings. Drawings is an Owners Equity Account. Owner’s Equity decreases when the owner makes a drawing Wamark Publishers ©

7. Owner’s Equity The two Owner’s Equity Accounts are: Capital and Drawings Transaction: The owner drew R 1 500 for personal use. Capital Drawings Assets + + + - DR Drawings (O/E) CR DR Bank (A) CR Drawings 1 500 Bank 1 500 Effect on Accounting Equation Drawings decreases Owner’s Equity. Bank is an Asset that decreases when a drawing is made. A = O/E + L - 1 500 = - 1 500 The owner may make drawings as many times as he/she wishes. Wamark Publishers ©