Session 3 Double entry bookkeeping
☆The duality concept and double entry bookkeeping
Duality concept: each and every transaction has a double effect on the business and the accounting equations.(A= C + L)
Rules of double entry bookkeeping:
● Each time a transaction is recorded, both effects must be taken into account.
● These two effects are equal and opposite such that the accounting equation will always prove correct.
Assets – Liabilities = Capital
● Traditionally, one effect is referred to as the debit side ( Dr.) and the other as the credit side of the entry (Cr.)
☆Ledger accounts, debits and credits
Ledger account:
● transactions are recorded in the relevant ledger accounts. There is a ledger
account for each asset, liability, revenue and expenses’ item, and for the owner’s capital.
● Each account has two sides: the debit and credit sides.
● The duality concept means that each transaction will affect two ledger accounts
● One account will be debited and the other credited
● Whether an entry is to debit or credit side of an account depend on the types of account and the transaction.
，我們將會及時處理。