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Chapter (2) : The Double Entry System The Fundamental Rules of Double Entry

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James Milzer

This document contains an excerpt from an accounting textbook that discusses the fundamental rules of double-entry bookkeeping. It provides examples of common business transactions and identifies which accounts should be debited and credited for each transaction based on the rules. It also includes exercises for the reader to practice applying the debit and credit rules to different scenarios.

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Chapter (2) : The Double Entry System The Fundamental Rules of Double Entry

Uploaded by

James Milzer
86 views4 pages
This document contains an excerpt from an accounting textbook that discusses the fundamental rules of double-entry bookkeeping. It provides examples of common business transactions and identifies which accounts should be debited and credited for each transaction based on the rules. It also includes exercises for the reader to practice applying the debit and credit rules to different scenarios.

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Chapter 2

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This document contains an excerpt from an accounting textbook that discusses the fundamental rules of double-entry bookkeeping. It provides examples of common business transactions and identifies which accounts should be debited and credited for each transaction based on the rules. It also includes exercises for the reader to practice applying the debit and credit rules to different scenarios.

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© All Rights Reserved
Download as PDF, TXT or read online from Scribd
Download as pdf or txt
86 views4 pages

Chapter (2) : The Double Entry System The Fundamental Rules of Double Entry

Uploaded by

James Milzer
This document contains an excerpt from an accounting textbook that discusses the fundamental rules of double-entry bookkeeping. It provides examples of common business transactions and identifies which accounts should be debited and credited for each transaction based on the rules. It also includes exercises for the reader to practice applying the debit and credit rules to different scenarios.

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LCCI Level I & II

Chapter (2)
THE DOUBLE ENTRY SYSTEM
THE FUNDAMENTAL RULES OF DOUBLE ENTRY

The account which receives value is Debited.


The account which gives value is Credited.

DEBIT
When an item is entered on the left side of the account, it is called Debit.

CREDIT
When an item is entered on the right side of the account, it is called Credit.

USING LEDGER ACCOUNTS FOR RECORDING


To record business transactions, we make use of a ledger book which contains many
accounts.
In the ledger, the accounts are reveled as follows:-

pg. 1 Capital Vocational Training School


LCCI Level I & II

ACCOUNT
The form of record kept with each item is called an account.

LEDGER
A group of accounts is called a ledger.

FOLIO (FO)
Each page in a ledger is called a folio.
Folio (or) FO provides cross-referencing of the page (or account) number or the entries.

EXERCISES ON DOUBLE ENTRY

1. Complete the following table;


Account to Account to
be debited be credited

(a) Bought office machinery on credit from D.Issacs Ltd. .......................... .......................
(b) N Fax, paid us in cash. .......................... .......................
(c) Repaid part of Loan from P-Exter by cheque. .......................... .......................
(d) Returned some of office machinery to D-Issacs Ltd. .......................... .......................
(e) N Lynn, Pays us by cheque. .......................... .......................
(f) Bought motor van by cash. .......................... .......................

2. Complete the following tables showing which accounts are to be debited and which to be
credited.
Account to Account to
be debited be credited

(a) Bought motor lorry for cash. ...................... .......................


(b) Paid to T Lake, by cheque. ...................... .......................
(c) Repaid P Logan’s Loan by cash. ...................... .......................
(d) Sold motor lorry for cash. ...................... .......................
(e) Bought office machinery on credit from Ultra Ltd. ...................... .......................
(f) J Cross pays us by cheque. ...................... .......................
(g) A Hill pays us by cash. ...................... .......................
(h) Proprietor puts a further amount into business
by Cheque. ...................... .......................
(i) A loan of £200 in cash is received from L Lowe. ...................... .......................
(j) Paid to D Lord by cash. ...................... .......................

pg. 2 Capital Vocational Training School


LCCI Level I & II

3. Complete the following table showing which accounts are to be debited and which to be credited.
Account to Account to
be debited be credited

(a) Inventory bought on credit from J Reid. ...................... .......................


(b) Inventory sold on credit to B Perkins. ...................... .......................
(c) Motor Van bought on credit from H Thomas. ...................... .......................
(d) Inventory sold, a cheque being received immediately. ...................... .......................
(e) Inventory sold for cash. ...................... .......................
(f) Inventory we returned to H Hardy. ...................... .......................
(g) Machinery sold for cash. ...................... .......................
(h) Goods returned to us by J Nelson. ...................... .......................
(i) Goods bought on credit from D Sim. ..................... .......................
(j) Goods we returned to H Forbes. ...................... .......................

4. Complete the following table showing which accounts are to be debited and which to be credited.
Account to Account to
be debited be credited

(a) Goods bought on credit from T Morgan. ...................... .......................


(b) Goods returned to us by J Thomas. ...................... .......................
(c) Machinery returned to L Jones Ltd. ...................... .......................
(d) Goods bought for cash. ...................... .......................
(e) Motor Van bought on credit from D Davis. ...................... .......................
(f) Goods returned by us to I Prince. ...................... .......................
(g) D Picton paid us his account by cheque. ...................... .......................
(h) Good bought by cheque. ...................... .......................
(i) We paid B Henry, by cheque. ...................... .......................
(j) Goods sold on credit to J Malings. ...................... .......................

5. Complete the following table showing which accounts are to be debited and which to be credited.
Account to Account to
be debited be credited

(a) Jones started business with cash £5,000. ...................... .......................


(b) Purchase furniture and fixture for cash £1,200. ...................... .......................
(c) Purchases goods for cash £1,500. ...................... .......................
(d) Purchases goods on credit from Moon Shoe
Business £2,000. ...................... .......................
(e) Sold goods for cash £800. ...................... .......................

pg. 3 Capital Vocational Training School


LCCI Level I & II

(f) Sold goods on credit to Kim Store £250. ...................... .......................


(g) Paid cash for expenses £250. ...................... .......................

6. Complete the following table showing which accountings are to be debited and which to be
credited.
Account to Account to
be debited be credited

(a) Paid insurance by cheque. ...................... .......................


(b) Paid motor expenses by cash. ...................... .......................
(c) Rent received in cash. ...................... .......................
(d) Paid rates by cheque. ...................... .......................
(e) Received refund of rates by cheque. ...................... .......................
(f) Paid for stationery expenses by cash. ...................... .......................
(g) Paid wages by cash. ...................... .......................
(h) Sold surplus stationery receiving by cheque. ...................... .......................
(i) Received sales commission by cheque. ...................... .......................
(j) Bought motor van by cheque. ...................... .......................

pg. 4 Capital Vocational Training School

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