Double Entry

Double Entry is the basis of all accounting knowledge.

Therefore it is essential to understand this concept. Once understood you can prepare complex account, reconciliation, adjustment and reports.

Accounting statements revolves around five components.

Assets Liabilities Revenue Expense Equit/Capital & Drawings

Rule of the Game for recording/double entry:

Assets Increase- Debit Assets decrease-Credit &

Reverse the entries for Liabilities Liabilities Increase- Credit Liabilities Decrease- Debit

Capital Increase-Debit Capital Decrease- Credit

Reverse for Drawings Drawings Increase- Credit Drawings Decrease- Debit.

I will illustrate one example for assets For example You buy a laptop for your business costing 2,000 pounds (cash Paid)

Recording this transaction based on the above concept

Laptop (Asset) 2,000 Dr Cash (Asset) 2,000 Cr

Follow the same rule for liabilities and other accounts as explained above

Thanks

Shahzad ACCA, MSc