This document provides an overview of double-entry accounting principles including how to record journal entries, post to ledger accounts, and prepare a trial balance. It discusses the double-entry rules of debiting and crediting accounts for assets, liabilities, capital, expenses, revenues, and inventories. It also distinguishes between debit balances, credit balances, and zero balances when closing ledgers. The purposes of a trial balance are to ensure the accounting equation balances and check for errors before preparing financial statements.
2. COURSE
OUTLINE
01
02
03
04
05
06
EXPLAIN THE DOUBLE-ENTRY RULES
PREPARE THE POSTING OF JOURNAL ENTRIES
INTO RESPECTIVE LEDGERS ACCOUNT
SHOW THE BALANCING OFF THE ACCOUNT
DESCRIBE A TRIAL BALANCE
PREPARE A TRIAL BALANCE
TYPES OF ERRORS THAT ARE REVEALED BY
TRIAL BALANCE
3. There is no limit on the number of accounts that
may be used in a transaction , but the minimum
is two accounts.
DOUBLE ENTRY
RULES
A record keeping system under which every
transaction is recorded in at least two
accounts.
5. DD
Steps to Record Transaction into Ledger Account
(Use Double Entry Concepts)
6. DOUBLE ENTRIES PRINCIPLES FOR
ASSETS,LIABILITESAND CAPITAL
Double-entry for assets-
All assets account will be recoded at debit side of ledger when it increase and recorded at credit
side when it decrease
7. 01
Double-entry for capital- Capital will be recorded at debit side when its decrease and will be recorded at credit side
when its increase
Double entries principles for expenses and revenue
Double-entry for expenses-
All expenses account will be recoded at debit side
of ledger when it increase and recorded at credit
side when it decrease
8. Double entries principle for
inventories
Increases in Inventory
Increases in inventory are often due to purchases.
Decreases in Inventory
An inventory decreases with sales.
9. Double entries for trade discount and cash discount
Trade Discount
No entry is made for trade discounts in the double entry accounts.
Cash Discount
Cash discount happened when we settle the amount of debts according the credits term.
10. Distinguish between the trade discount and cash discount
Posting journal entries into respective ledgers account
11.
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STRATEGY
N°1
STRATEGY
N°2
15. Balance of account for assets, liabilities, capital, revenue and expenses
16. Distinguish between the debit balance, credit balance and zero balance
when we closed the ledgers we will get either debit balance, credit balance or zero balance.
debit balance when the debit side amount is larger than credit side otherwise we will get
the credit balance when credit side or ledgers amount is larger than debit side.
17. Purposes of a Trial Balance
Trial Balance acts as the first step in the preparation of financial statements. It is a
working paper that accountants use as a basis while preparing financial statement.
Trial balance ensures that for every debit entry recorded, a corresponding credit entry
has been recorded in the books in accordance with the double entry concept of
accounting. If the totals of the trial balance do not agree, the differences may be
investigated and resolved before financial statements are prepared.
In a manual system a trial balance was commonly prepared by the bookkeeper in order
to discover whether math errors and/or some posting errors were made.
18. Format of Trial Balance
There are two (2) formats of Trial Balance:
• T Format
• Statement Format