1. Double Entry System 2 DRCR

2. An Overview… General Journal Special Journals Ledger Accounts Trial Balance Prepare Simple Financial Statements Adjustments

3. Objectives At the end of the lesson, students should be able to : know what are Ledger Accounts. prepare Ledger Accounts using the ‘T’ format. post transactions from the Journals to the Ledger Accounts.

4. LEDGER BOOK AccountAccount

5. What is an Account ? An account is a brief and systematic record of transactions which are similar in nature.

6. D EBIT C REDIT DrCr NAME OF ACCOUNT NAME OF ACCOUNT ‘T’ format ‘T’ format Left side Right side

7. D EBIT C REDIT DrCr ASSETS ACCOUNT ASSETS ACCOUNT ‘T’ format ‘T’ format

8. D EBIT C REDIT DrCr OWNER’S EQUITY ACCOUNT OWNER’S EQUITY ACCOUNT ‘T’ format ‘T’ format

9. D EBIT C REDIT DrCr LIABILITY ACCOUNT LIABILITY ACCOUNT ‘T’ format ‘T’ format

10. D OUBLE - E NTRY ACCOUNTING SYSTEM ACCOUNTING SYSTEM two Every business transaction will involve two parties give up Each party must give up out something (out) in order to receive in to receive something in return. (in)

11. W hen the business sells its goods for cash, it will give up its goods to its customer and will receive cash in return. Cash IN Goods OUT Example : Firm Firm’s goods

12. W hen a business purchase goods with cash, it will give up its cash to its suppliers and will receive goods in return. Goods IN Cash OUT Example : Firm Supplier’s goods

13. W hen a business purchase a motor vehicle, it will give up its cash to the seller and will receive motor vehicle in return. Example : Motor Vehicle IN Cash OUT Firm Motor Vehicle

14. When a debtor pays to the firm, the firm’s cash will increase and the firm’s debtors will decrease. Example : Firm Debtor Cash increases Debtors decreases

15. When the firm pays to the creditors, the firm’s cash will decrease and the firm’s creditors will decrease. Example : Firm Creditors Creditors decreases Cash decreases

16. Hence, For every business transaction, two accounts will be involved. One account will have a debit entry and another account will have a credit entry.

17. a) Paid $200 for office stationery CASH a/c Dr CASH a/c Cr STATIONERY a/c Dr STATIONERY a/c Cr $200 Stationery Stationery Cash

18. CASH a/c Dr CASH a/c Cr PURCHASES a/c Dr PURCHASES a/c Cr $500 Purchases Purchases Cash b) B ought goods worth $500 using cash

19. CASH a/c Dr CASH a/c Cr SALES a/c Dr SALES a/c Cr $800 Sales Cash c) Sold goods for cash $800

20. STOCK Dr STOCK Cr TRADING a/c Dr TRADING a/c Cr $8000 Trading Stock d) Closing stock counted is worth $8000

21. DRAWINGS a/c Dr DRAWINGS a/c Cr CASH a/c Dr CASH a/c Cr $1500 Cash Drawings e) The owner drew out cash $1500 for personal use.

22. Summary - 3 2 1 RULE… 3 things that you have learnt today… 2 questions that you may want to ask… 1 thing that you still have problem understanding…