6/13/2023 0 Comments Accounting debit credit![]() ![]() When you first encounter double entries it is not clear which two pages you need to use but with practice it becomes more familiar. Remember that we need to write it on two pages to keep control and help us to identify if we made a mistake. When we pay a loan we write it on the cash out page and on the loan page. When we buy a machine we write it on the cash out page and the machine page. When a customer buys something for cash we need to write it on the cash in page and on the sales page. So for each transaction you need to decide on which two pages you need to record it. We’ll have one page for cash coming in, one page for cash going out, one page for sales, and one page for expenditure but that one page will quickly become one page for each type of expenditure. ![]() So in our big book or ledger we are going to use one page for each type of transaction. Showing a set of accounts with every single transaction displayed may make them difficult to understand. Part of the bookkeeping process is categorising and summarising. Next, how do we deal with the debits and credits and what do we debit and credit? Let’s go back in time to when bookkeeping was performed with books. Of course it is possible to make two identical errors that prevent you from discovering either error but further procedures such as control account reconciliations will help to discover those. It may not be easy to find where the mistake is but the double entry will at least allow you to know that there is a mistake. However, if you enter the number a second time after the ‘phone call and enter it correctly you will know that there is a mistake because your trial balance will not balance. The risk is that you never enter the 50p into the system. You finish the call and then move onto the next transaction. It is really easy to make mistakes when performing transactions – all it takes is a ‘phone call to interrupt you part way through a transaction for you to forget that you were in the middle of something and then you make a mistake. Let’s suppose you are entering a sale of £5,645.50 and the telephone rings after you have entered the pounds but before you have entered the pence. First, why do we have double entry rather than single entry? I am sure that Prue and Simon will assume that this will be one of many! Here is my explanation of it and I hope that a different point of view may help you to understand it better. I am sure that you have all studied double entry bookkeeping but it may not have made sense to you at first…Īs the new boy in the team I thought it would be useful to make a contribution to the blog. Getting to grips with Debits and Credits in Double Entry Bookkeeping ![]()
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