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

2. 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 + 500 = +500 + 0 Wamark Publishers ©

3. 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 + 200 = + 200 + 0 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 - 150 = - 150 + 0 What is the profit in Rands? Wamark Publishers ©

4. 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 + 700 = 0 + + 700 Wamark Publishers ©

5. 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 = - 700 + +700 Note that the Accounting Equation is still balanced Wamark Publishers ©