1. The Accounts of the General Ledger
DEBIT (DR)
BALANCE SHEET SECTION
CREDIT (CR) +
CAPITAL +
DRAWINGS -
ASSETS + - +
LIABILITIES
NOMINAL SECTION - +
INCOME
EXPENSES + -
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2. Transaction: The Debtor settles his account R 500
Assets Income Expense
Effect on Accounting Equation
Bank is an Asset which increases when a payment is received from a Debtor.
Debtors Control is also an Asset which decreases when a payment is received from a Debtor.
A = O/E L
+ 500 =
DR Bank(A) CR
DR Debtors Control (A) CR
Debtors Control
Current Income
Bank
How much does the Debtor owe after this transaction?
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3. Transaction: Pay a Creditor R 500
Assets Income Expense Liabilities DR Bank(A) CR DR Creditors Control(L)CR
Effect on Accounting Equation
Bank is an Asset which decreases when making a payment to a Creditor.
Creditors Control is a Liability which also decreases when a payment is made to a Creditor.
A = O/E L =
Creditors
Control 700
Creditors Control 500
Bank
Trading Inventory 700
How much is owed to the Creditor after this transaction?
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