Topic: Double Entry System (Chapter 2)

Double entry system is a system where each transaction is entered twice in the books. That is, for every
debit entry there is a corresponding credit entry.

Transactions: these are the activities of the business that causes an effect (increase or decrease) on two
or more item in the accounting equation.

Account: a place where all information referring to a particular asset, liability or capital is entered.

Format of An account:

DR Title (Name) of the Account written here CR

19x7   $  19x7   $
Left hand side is Right hand side is
the Debit side the Credit side
 
 
Date Descriptio Amoun
n t
 
 
An Entry

Every entry in the account must have three important elements:

Date: This indicates when the transaction took place.

Description (Details): This tells you the other account that was affected by the transaction. That is, in
which account to look to find the other half of the transaction.

Amount: the monetary value you increased or decreased the account with.
 Double Entry Rules

Accounts To Record Entry in the Account

Assets Increase Debit (Dr)

Decrease Credit (Cr)

Liabilities Increase Credit (Cr)

Decrease Debit (Dr)

Capital Increase Credit (Cr)

Decrease Debit (Dr)