Double Entry
e EDouble entry - Income statement
1. Sales
When sales are made, capital increases by the amount of profit made on the sale.
2. Expenses
When ongoing costs, such as wages or rent are incurred, capital decreases.
3. Income and expense accounts
Periodically, usually once a year, the figure of profit (income - minus expenses) is added to capital. During the year figures are accumulated in separate accounts for each item of income and expenditure.
4. Cost of sales
At the end of the year, the cost of all the items sold is deducted from sales to give the gross profit. The cost of items unsold appears in the Statement of financial position inventory account. There are different ways of recording the purchase of goods for resale to arrive at this final position. This section shows how we deal with such purchases in this tutorial.
5. Example: Mr Allen - Introduction
We now bring in new accounts for Mr Allen's income and expenses.
6. Example: Mr Allen - Worked examples
We see here how the values of the various items of income, expenses, assets, liabilities and capital change for a few transactions.
7. Double entry
In this section, we see the double entry principles for income and expense accounts.
8. Example: Mr Allen - Double entry
This section explains 3 transactions for Mr Allen in terms of double entry.
9. Double entry: Mr Allen - Student examples
This section contains 6 transactions for you to complete the double entry required. After these transactions are recorded, you can then draw up the trial balance.
10. Example set 1: 20 transactions
This section contains 20 transactions for you to work out which accounts are to be debited and credited. You do not need to complete all 20 questions, but, if you need practice, you will find them useful.
11. Example set 2: Miss Hassan
This section contains more questions if you need them - the more questions you do, the easier double entry becomes! There are 10 questions for Miss Hassan, followed by the
1. Sales
When sales are made, capital increases by the amount of profit made on the sale.
2. Expenses
When ongoing costs, such as wages or rent are incurred, capital decreases.
3. Income and expense accounts
Periodically, usually once a year, the figure of profit (income - minus expenses) is added to capital. During the year figures are accumulated in separate accounts for each item of income and expenditure.
4. Cost of sales
At the end of the year, the cost of all the items sold is deducted from sales to give the gross profit. The cost of items unsold appears in the Statement of financial position inventory account. There are different ways of recording the purchase of goods for resale to arrive at this final position. This section shows how we deal with such purchases in this tutorial.
5. Example: Mr Allen - Introduction
We now bring in new accounts for Mr Allen's income and expenses.
6. Example: Mr Allen - Worked examples
We see here how the values of the various items of income, expenses, assets, liabilities and capital change for a few transactions.
7. Double entry
In this section, we see the double entry principles for income and expense accounts.
8. Example: Mr Allen - Double entry
This section explains 3 transactions for Mr Allen in terms of double entry.
9. Double entry: Mr Allen - Student examples
This section contains 6 transactions for you to complete the double entry required. After these transactions are recorded, you can then draw up the trial balance.
10. Example set 1: 20 transactions
This section contains 20 transactions for you to work out which accounts are to be debited and credited. You do not need to complete all 20 questions, but, if you need practice, you will find them useful.
11. Example set 2: Miss Hassan
This section contains more questions if you need them - the more questions you do, the easier double entry becomes! There are 10 questions for Miss Hassan, followed by the