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Introduction to acccounting chapter 4 new

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Introduction to acccounting chapter 4 new

  1. 1. BIT 163 INTRODUCTION TO ACCOUNTING CHAPTER FOUR
  2. 2. LEDGER The Double Entry System <ul><li>The definition of Double Entry System are as below: </li></ul><ul><li>-Double entry shows that every transaction affects two items. </li></ul><ul><li>-that is, each transactions which occur in business must enter twice in book keeping </li></ul><ul><li>-its mean for each transaction, a book keeping entry will have to be made to show an increase or decrease of one item, and another entry to show the increase or decrease of the other item. </li></ul><ul><li>-so double entry system shows a debit entry and a credit entry for each transaction. </li></ul>
  3. 3. LEDGER The Double Entry System <ul><li>Ledger is define as a set of accounts which use to record each transaction in the business with using double entry system </li></ul><ul><li>Ledger is divided into two type of ledger as per below: </li></ul><ul><li>General Ledger </li></ul><ul><li>Subsidiary Ledger </li></ul><ul><li>General Ledger-use to record all non personal accounts </li></ul><ul><li>e.g.: purchase account, sales account, wages account, capital account and other non personal accounts. </li></ul><ul><li>Subsidiary Ledger-use to record all personal accounts </li></ul><ul><li>Divides by two: </li></ul><ul><li>Purchase Ledger-we will record all the creditors account. </li></ul><ul><li>Sales Ledger-all the debtors account. </li></ul>
  4. 4. THE ACCOUNTS FOR DOUBLE ENTRY <ul><li>-Each account should be shown on a separate page in the accounting books. </li></ul><ul><li>-The double entry system divides each page into two halves. </li></ul><ul><li>-The left hand side of each page is called debit side, while the right hand side is called the credit side. </li></ul><ul><li>-accounts divided into 10 groups which 5 or the accounts always be debit side (if the amount is increase) and another five will be in the credit side (if the amount is increase) </li></ul>
  5. 5. Illustration Capital Drawings Revenue Expenses Return Outwards Return Inwards Sales Purchases Liability Asset Credit (If the amount of the account increase) Debit (If the amount of the account increase)

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  • SivaniInduru

    May. 11, 2018

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