SS1 First Term Financial Accounting Lesson Note – Principles and Practice of Double Entry

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WEEK FOUR (4)     

TOPIC: PRINCIPLES AND PRACTICE OF DOUBLE ENTRY:

CONTENTS:

(a) Concept of Double Entry

(b) Review of Double Entry and Comprehensive illustration

SUB- TOPIC 1: CONCEPT OF DOUBLE ENTRY SYSTEM:

Among the oldest known and indisputable principles of accounting is the Double Entry principle.

The principle states that, ‘for every debit entry there must be a corresponding credit entry’, which in everyday English means that for every receiver there must be a giver.

The receiver is always regarded as the Debtor whiles the giver as a creditor under this principle.

As far as double entry principle is concerned, there must always be two parties to a transaction. One entry at the debit side for the debtor or the receiver and the other entry at the credit side for the creditor or the giver.

REVIEW OF DOUBLE ENTRY WITH COMPREHENSIVE ILLUSTRATIONS

The principles of Double Entry

The double entry principles applied by observing two rules. The rule states that debit all receiver, credit all giver; meaning that, debit the receiving account and credit the giving account. The double entry system of book keeping will be used for recording transactions in the ledgers.

Summary:

Debit= Receiving account

Credit=Giving account

Procedures to be followed:

• Every transaction must affect two accounts
• Give names to the two accounts
• Debit – Receiving account (Receiver)
• Credit – giving account (Giver)

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