1. Commencing Entries 1. Establishing a new business -cash receipts journal is used to record contributed cash because it is a reciept -non-cash assets – recorded in general journal 2. Switching from single to DOUBLE ENTRY -only general journal is used, as the cash at bank is not a receipt, just a balance at a point in time

2. Contribution of an asset by owner -Cash – cash receipts journal -Non cash assets – general journal DR Asset CR Capital

3. Withdrawal of asset by owner Cash – cash payments journal Non cash asset – General Journal DR Drawings CR Asset

4. AGREED VALUE If owner purchases – evidence would be provided by source document (invoice/cheque butt – HISTORICAL COST ACCOUNTING) If no source document available to verify and owner is contributing a 2 nd hand item, an estimate of its value is made in an attempt to be relevant. – AGREED VALUE of an asset! - RELEVANCE