ACC106       Chapter 3PRINCIPLES OF DOUBLE ENTRY ( THE RECORDING PROCESS)
LEARNING OBJECTIVES
3.1 Introduction
DOUBLE ENTRY PRINCIPLESClassification                        DEBIT                      CREDITAssets                    in...
DOUBLE ENTRY PRINCIPLES FOR ASSETS    The double entry principle for assets is:                                          ...
DOUBLE ENTRY PRINCIPLES FOR                     LIABILITIES    The double entry principle for liabilities is:            ...
DOUBLE ENTRY PRINCIPLES FOR                 OWNER’S EQUITY    The double entry principle for Owner’s Equity is:          ...
DOUBLE ENTRY PRINCIPLES FOR                   EXPENSESI) The double entry principle for Expenses is:                      ...
DOUBLE ENTRY PRINCIPLES FOR                   REVENUEII) The double entry principle for Revenue is:                       ...
DOUBLE ENTRY PRINCIPLES FOR STOCK   The double entry are as follows:           Transactions                       Effects...
ExampleTransactions                    Effects                       Double entryPurchased goods:                Purchase ...
DOUBLE ENTRY PRINCIPLES FOR STOCK             (cont’d)                                         Purchases a/cJan 6 Creditor...
DOUBLE ENTRY PRINCIPLES FOR STOCK             (cont’d)i.e 3. Jan 8 Credit Sales to Zila RM 400Journal entriesDr. Debtor – ...
DOUBLE ENTRY PRINCIPLES FOR STOCK              (cont’d)i.e 4. Jan 15 Zila returned defective goods worth RM 40Journal entr...
DOUBLE ENTRY PRINCIPLES FOR STOCK              (cont’d)i.e 5. Jan 17 Bought goods from Jenny paying by cheque RM 400Journa...
DOUBLE ENTRY PRINCIPLES FOR STOCK              (cont’d)i.e 6. Jan 19 Cash sales to Ali Baba RM 240Journal entriesDr. Cash ...
TRANSPORTATION COST FOR          PURCHASE & SALES OF GOODSTransportation Costs            DOUBLE ENTRY               ACCOU...
DOUBLE ENTRY PRINCIPLES FOR      TRADE DISCOUNT
DOUBLE ENTRY PRINCIPLES FOR TRADE         DISCOUNT (cont’d) Journal entries Dr. Purchases a/c RM 1,900          Cr.      C...
DOUBLE ENTRY PRINCIPLES FOR      CASH DISCOUNT
DOUBLE ENTRY PRINCIPLES FOR        CASH DISCOUNT                    Journal entry 1           Journal entry 2Discount Rece...
DOUBLE ENTRY PRINCIPLES FOR        CASH DISCOUNTExample:                  Journal entry 1           Journal entry 2Discoun...
DOUBLE ENTRY PRINCIPLES FOR      CASH DISCOUNT (cont’d)                        Creditor – Jenny TradingJan31    Discount R...
DOUBLE ENTRY PRINCIPLES FOR      CASH DISCOUNT (cont’d)                              Debtor - AhmadJan 19   Sales         ...
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Ch 4 principles of double entry

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Ch 4 principles of double entry

  1. 1. ACC106 Chapter 3PRINCIPLES OF DOUBLE ENTRY ( THE RECORDING PROCESS)
  2. 2. LEARNING OBJECTIVES
  3. 3. 3.1 Introduction
  4. 4. DOUBLE ENTRY PRINCIPLESClassification DEBIT CREDITAssets increase in Assets decrease in AssetsLiability decrease in Liabilities increase in LiabilitiesCapital/ Owner’s equity decrease in Owner’s Equity increase in Owner’s EquityRevenue decrease in Revenue increase in RevenueExpenses increase in Expenses decrease in Expenses
  5. 5. DOUBLE ENTRY PRINCIPLES FOR ASSETS The double entry principle for assets is: Assets a/c Debit Credit To record increase in Assets To record decrease in Assets i.e Jan 1 Bought equipment paying by cheque RM 1,000 Dr. Equipment a/c RM 1,000 Cr. Bank a/c RM 1,000 Equipment a/c Jan 1 Bank 1,000 Bank a/c Jan 1 Equipment 1,000
  6. 6. DOUBLE ENTRY PRINCIPLES FOR LIABILITIES The double entry principle for liabilities is: Liabilities a/c Debit Credit To record decrease in Liabilities To record increase in Liabilities i.e Jan 2 Bought equipment on credit from Streamyx Sdn. Bhd. RM 2,000 Dr. Equipment a/c RM 2,000 Cr. Creditor a/c – Streamyx Sdn. Bhd. RM 2,000 Equipment a/c Jan 2 Creditor 2,000 Creditor a/c – Streamyx Sdn. Bhd a/c Jan 2 Equipment 2,000
  7. 7. DOUBLE ENTRY PRINCIPLES FOR OWNER’S EQUITY The double entry principle for Owner’s Equity is: Owner’s Equity a/c Debit Credit To record decrease in Owner’s Equity To record increase in Owner’s Equity i.e Jan 1 The owner started business with RM 10,000 cash in bank Dr. Bank a/c RM 10,000 Cr. Capital a/c. RM 10,000 Bank a/c Jan 1 Capital 10,000 Capital a/c Jan 1 Bank 10,000
  8. 8. DOUBLE ENTRY PRINCIPLES FOR EXPENSESI) The double entry principle for Expenses is: Expenses a/c Debit Credit To record increase in Expenses To record decrease in Expenses i.e Jan 6 Paid salary by cheque RM 300 Dr. Salary a/c RM 300 Cr. Bank a/c. RM 300 Salary a/c Jan 6 Bank 300 Bank a/c Jan 6 Salary 300
  9. 9. DOUBLE ENTRY PRINCIPLES FOR REVENUEII) The double entry principle for Revenue is: Revenue a/c Debit Credit To record decrease in Revenue To record increase in Revenue i.e Jan 8 Received cash for house rental RM 450 Dr. Cash a/c RM 450 Cr. Rent Received a/c. RM 450 Cash a/c Jan 8 Rent received 450 Rent Received a/c Jan 8 Cash 450
  10. 10. DOUBLE ENTRY PRINCIPLES FOR STOCK The double entry are as follows: Transactions Effects Double entry Purchased of goods Purchase Expense Increase Debit Purchases a/c Sales of goods Sales Revenue Increase Credit Sales a/c Purchases Returns Purchase Expense decrease Credit Purchase Returns a/c Sales Returns Sales Revenue decrease Debit Sales Return a/c
  11. 11. ExampleTransactions Effects Double entryPurchased goods: Purchase Expense Increase DR Purchases a/cPurchased goods on credit Liability creditor increase CR Creditor (Siti) a/cfrom Siti EntSales of goods: Sales Revenue Increase DR Debtor (Zila) a/cCredit Sales to Zila Asset debtor increase CR Sales a/cPurchases Returns: Liability creditor decrease DR Creditor (Siti) a/cReturned goods to Siti Purchase Expense decrease CR Purchase Returns a/cEnterpriseSales Returns: Sales Revenue decrease DR Sales Return a/cZila returned defective goods Asset debtor decrease CR Debtor (Zila) a/c
  12. 12. DOUBLE ENTRY PRINCIPLES FOR STOCK (cont’d) Purchases a/cJan 6 Creditor - Siti Enterprise 2, 000 Creditor - Siti Enterprise a/c Jan 6 Purchases 2,000i.e 2. Jan 7 Returned goods to Siti Enterprise RM 100Journal entriesDr. Creditor - Siti Enterprise RM 100 Cr. Purchases Return a/c RM 100 Creditor - Siti Enterprise a/cJan 7 Purchases Return 100 Jan 6 Purchases 2,000 Purchases Return a/c Jan 7 Creditor 100
  13. 13. DOUBLE ENTRY PRINCIPLES FOR STOCK (cont’d)i.e 3. Jan 8 Credit Sales to Zila RM 400Journal entriesDr. Debtor – Zila a/c RM 400 Cr. Sales a/c RM 400 Debtor – Zila a/cJan 8 Sales 400 Sales a/c Jan 8 Debtor - Zila 400
  14. 14. DOUBLE ENTRY PRINCIPLES FOR STOCK (cont’d)i.e 4. Jan 15 Zila returned defective goods worth RM 40Journal entriesDr. Return Inwards a/c RM 40 Cr. Debtor – Zila a/c RM 40 Return Inwards a/cJan 15 Debtor – Zila 40 Debtor – Zila a/cJan 8 Sales 400 Jan 15 Return Inwards 40
  15. 15. DOUBLE ENTRY PRINCIPLES FOR STOCK (cont’d)i.e 5. Jan 17 Bought goods from Jenny paying by cheque RM 400Journal entriesDr. Purchases a/c RM 400 Cr. Bank a/c RM 400 Purchases a/cJan 17 Bank 400 Bank a/c Jan 17 Purchases 400
  16. 16. DOUBLE ENTRY PRINCIPLES FOR STOCK (cont’d)i.e 6. Jan 19 Cash sales to Ali Baba RM 240Journal entriesDr. Cash a/c RM 240 Cr. Sales a/c RM 240 Cash a/cJan 19 Sales 240 Sales a/c Jan 19 Cash 240
  17. 17. TRANSPORTATION COST FOR PURCHASE & SALES OF GOODSTransportation Costs DOUBLE ENTRY ACCOUNT TO RECORDFreight or carriage DR Carriage outwards a/c Trading a/coutwards: CR Cash/ Bank a/c (as part of the cost of goodsThe cost of transport paid to purchased)send the goods sold to thebuyer’s premisesFreight or carriage D R Carriage inwards a/c Profit & Loss a/cinwards: C R Cash/ Bank a/c (expenses)The cost of transport paid tobring in the goods bought tothe business premises
  18. 18. DOUBLE ENTRY PRINCIPLES FOR TRADE DISCOUNT
  19. 19. DOUBLE ENTRY PRINCIPLES FOR TRADE DISCOUNT (cont’d) Journal entries Dr. Purchases a/c RM 1,900 Cr. Creditor - Teepah Trading RM 1,900 Purchases a/c Jan 25 Creditor – Teepah Trading 1,900 Creditor - Teepah Trading a/c Jan 25 Purchases 1,900
  20. 20. DOUBLE ENTRY PRINCIPLES FOR CASH DISCOUNT
  21. 21. DOUBLE ENTRY PRINCIPLES FOR CASH DISCOUNT Journal entry 1 Journal entry 2Discount Received DR Creditor a/c DR Creditor a/c CR Discount Receive a/c CR bank a/cDiscount Allowed DR Discount Allowed a/c DR Bank a/c CR Debtor a/c CR Debtor
  22. 22. DOUBLE ENTRY PRINCIPLES FOR CASH DISCOUNTExample: Journal entry 1 Journal entry 2Discount Received: DR Creditor (Jenny) a/c DR Creditor (Jenny) a/cPaid supplier - Jenny RM38 RM1862Trading RM1900 bycheque after deducting CR Discount Receive a/c CR Bank a/ccash discount 2% RM38 RM1862Discount Allowed DR Discount Allowed a/c DR Bank a/cAhmad (debtor) paid RM60 RM2940RM3,000 by cheque after CR Debtor a/c CR Debtor a/cdeducting cash discount RM60 RM2940of 2%
  23. 23. DOUBLE ENTRY PRINCIPLES FOR CASH DISCOUNT (cont’d) Creditor – Jenny TradingJan31 Discount Received 38 Jan 18 Purchases 1,900Jan 31 Bank 1,862 1,900 1,900 Discount Received a/c Jan 31 Jenny Trading 38 Bank a/c Jan 31 Jenny Trading 1,862
  24. 24. DOUBLE ENTRY PRINCIPLES FOR CASH DISCOUNT (cont’d) Debtor - AhmadJan 19 Sales 3,000 Jan 31 Discount allowed 60 Jan 31 Bank 2,940 3,000 3,000 Discount Allowed a/cJan 31 Debtor – Ahmad 60 Bank a/cJan 31 Debtor – Ahmad 2,940
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