Double Entry Bookkeeping Method - Financial Accounting Course
About this Video
In this lecture series I discuss fully the Double Entry Principle of Accounting. Unlock the secrets of accounting with our engaging YouTube video on "The Principle of Double Entry". Dive into the foundational system that keeps the world's finances in balance. Whether you're a student, a professional, or simply curious about accounting, this video is your gateway to understanding how every financial transaction involves two equal and opposite entries. Discover the method that revolutionized accounting, making it the clear, precise, and reliable system we rely on today. Don't miss out on this essential financial knowledge – watch now and take the first step towards mastering the art of accounting!
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Double Entry Bookkeeping Method
•Double entry bookkeeping is based on the idea that each transaction has an equal but opposite effect. Every accounting event must be entered in ledger accounts both as a debit and as an equal but opposite credit.
•Ledger accounts, with their debit and credit sides, are kept in a way which allows the two-sided nature of every transaction to be recorded. This is known as the ‘double entry’ system of bookkeeping, because every transaction is recoded twice in the accounts.
Rules of Double Entry
•Increase in an asset, we make a DEBIT entry
•Decrease in an asset, we make a CREDIT entry
•Increase in a liability, we make A CREDIT entry
•Decrease in a liability, we make a DEBIT entry
•Increase in capital, we make a CREDIT entry
•Decrease in capital, we make a DEBIT entry
•Increase in Expenses, we make a DEBIT entry
•Increase in Income, we make a CREDIT entry
•A debit will:
–Increase an asset
–Decrease a liability
–Increase an expense
•A credit will:
–Decrease an asset
–Increase a liability
–Increase an income
•The basic rule, which must always be observed, is that every financial transaction gives rise to two accounting entries, one a debit and the other a credit.
•The total value of debit entries in the nominal ledger is therefore always equal at any one time to the total value of credit entries.
•Which account receives the credit entry and which receives the debit depends on the nature of the transaction.
CPA Innocent MUGISHA
Apr 10, 2024
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