PRINCIPAL OF DOUBLE ENTRY- SINGLE COLUMN
Hey Guys, Happy Friday!!!
Hope you enjoyed the week so far? 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 Book keeping.
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.
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, Lucy account, Britney 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 Jane N300.
Accounts- a) Motor Van
Account to be credited.
b) Jane Account to be debited.
DR
MOTOR VAN
ACCOUNT
CR
JAN 21 Jane N300
DR
JANE’S
ACCOUNT
CR
JAN 21 Motor
Van N300
EXAMPLE 2:
JAN 19- Received Rent from
Justin & 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
This brings
us to the end of today's session. Hope this was very helpful to you, leave a
comment of what you think of this tutorial and of your questions below. Have a
Blessed Day and Remember You are Amazing. God Bless.
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