Amy Fay - Music Study in Germany - Jansen McClurg Co 1880 MacMillan Company 1896-1922
Mr McClurg Double entry book-keeping 1. Objectives for today’s lesson! You should understand the...
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Transcript of Mr McClurg Double entry book-keeping 1. Objectives for today’s lesson! You should understand the...
Mr McClurg
Double entry book-keeping
1
Objectives for today’s lesson!You should understand the purposes of
accounting recordsYou should understand what we mean
by double entry book-keepingYou should understand what we mean
by the accounting equation
2
Why accounting?Let’s use our new textbook!!!! Page 1-2Many any notes here that are important
3
Double Entry!Essentially there are two events to every
transaction If you buy a car for £16,000 from your
bank account, then You gain:
You lose:When we say we gain something we debit
(DR) this to our accounts When we say we lose something we credit
(CR) this to our accountsPlace the Dr and Cr in the above example!
4
Double Entry (2)For every debit there is a credit, and for
every credit there is a debitFUNDAMENTAL RULE!!!!!
They come from the Latin wordsDepere (meaning “to owe”) – abbreviated Credere (meaning “to believe”) – abbreviated
Latin – language in the times of the 15th century Italian double entry system
5
Double Entry (3)We can increase the value of an account,
depending upon what type of account we are dealing with:
Note if you wanted to decrease the value of an account, then you place the transaction on the opposite side
DR CR Final Accounts?
6
Your turn to work – Worksheet 1
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When answering these questions consider these two important steps!
1.Identify what type of account we are dealing with (asset, liability, revenue, expense)
2.Are we increasing or decreasing their value?
Double entry (4)When we present accounts, we do so using T
Accounts
If this was the Motor Vehicle Account and we bought it for £16,000 in 2009 how should our T Account look?
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Your turn to work (again)!See worksheet 2
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Learning points!
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Remember the Business Entity concept!All personal assets and personal liabilities should
never be included in the business books The business is a separate entity, regardless of what
type of business it is (sole trader, company, partnership)
Fundamental Accounting EquationAssets = Liabilities + Capital (net of profits and
drawings)
Technically Capital/Profits are Liabilities – who does the business owe the “capital” and “profits” to?
Homework
11
Using worksheet 2 answer:Draft a Trial Balance for Jake’s newsagentsDraft a Profit and Loss Account and Balance
Sheet for the month of January 2010Make a list of what types of errors are not
identified by the Trial Balance (hint: there are 6)
Summary – in your own words answer the following
12
What is the Business Entity Concept?
If I wanted to increase the value of an expense account, which side should I put the entry; Debit or Credit?
What do we mean by the accounting equation?