PRINCIPAL OF DOUBLE ENTRY- SINGLE COLUMN.
Hey Guys, Happy Monday!!! Hope you enjoyed your weekend, cos
I did. Any way its Monday again and we are here to learn something new. So
let’s get started.
LEDGER is the
final destination of all transactions in the subsidiary books (that is the
sales day book, purchases day book etc). It is the most important book of
account because it is the book that contains permanent records of all
Transactions in a summarized and classified form. Transactions are recorded
here, using the Double Entry System of Bookeeping.
RULES OF
DOUBLE ENTRIES:
1. For Every
Credit Entry in an Account, there must be a Corresponding Debit Entry in
another Account.
2. For Every
Debit Entry in an Account, there must be a Corresponding Credit Entry in
another Account.
3. All
Transactions must be Credit and the other.
DIVISION OF
LEDGER:
1.
Personal
Ledger: These are ledgers for
Creditors Account and Debtors Accounts. For example, Purchases and Sales Ledger.
2.
General
Ledger: These are ledgers for
Real and Nominal Accounts. For example, Expenses Account, Income Account, Sales
Account, Purchases Account and Assets Account.
3.
Private
Ledger: These are Ledgers for
Capital and Drawings Account of the Owner. The Book is divided into separate
sections called Accounts, which may have one page or more. The Main Advantage
of subdivision is to permit the clerks to attend concurrently to the various
groups of
accounts, so that delay is avoided in posting and balancing them.
accounts, so that delay is avoided in posting and balancing them.
NATURE OF LEDGER:
1. The Left
Side is the Debit Side which is abbreviated as “DR”.
2. The Right
Side is the Credit Side which is abbreviated as “CR”.
3. The Debit
Side Receives Value.
4. The Credit
Side Gives Value.
5. The Ledger
has Columns for Date, Particulars, Folio and Amount on both sides.
6. Folios are
numbered consecutively and make reference to be easier and quicker.
An Account can be defined as a
record in a double entry system that is kept for cash class of asset,
liability, revenue and expense. The principles of double entry has been
adequately explained. Then the Next thing is the application of the system in
the principal book (ledger). It should be noted that when entering a
transaction in the ledger (posting the ledger) always use the name of the other
account in the account you are posting.
CLASSIFICATIONS OF ACCOUNTS:
1. Personal Account: is an
account for the names of individual, firm and business enterprises. For
example, Segun account, Lagunju Nig. Ltd Accounts, Debtors and Creditors
account.
2. Impersonal Account: is an
account for properties, item of expenditures and income. It can be divided into
two namely:
a.) Real
Account- is an account for something we can see, touch or move. They
are accounts for assets. For example, Land and Building Account, Machinery
Account etc.
b.) Nominal Account- is an
account for expenses incurred, income received, losses and gains. For example,
Rent Account, Discount Received Account, Discount Allowed Account, Insurance
and Interest Accounts.
EXAMPLE 1:
JAN 21- Sold Motor Van on Credit to
Fred N200.
Accounts- a) Motor Van Account to
be credited.
b) Fred Account to be
debited.
DR MOTOR VAN
ACCOUNT CR
JAN 21 Fred N200
DR FRED’S
ACCOUNT CR
JAN 21 Motor Van
N200
EXAMPLE 2:
JAN 19- Received Rent from Frank
& Co Ltd by cheque N1,000.
Accounts- a) Rent Received Account
to be credited.
b) Bank Account to be
debited.
DR RENT RECEIVED
ACCOUNT CR
JAN 19 Bank (Cheque) N1,000
DR BANK ACCOUNT CR
JAN 19 Rent Received N1,000
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