TOPIC 02:DOUBLE ENTRY SYSTEM
Meaning:
Is the book keeping principle of recording transactions twice in a book of account whereby the principle states that every debit entry must have a corresponding credit entry and every credit entry must have a corresponding debit entry with the same amount.
The fundamental rule to the double entry system is to debit the account what is received and credit what is given out.
Example; Mr. Juma started business on 1st June 2008 with capital in cash 30,000/=
June 2. With capital in cash 30,000/=
3.Bought goods for cash Sh. 22,000/=
4.Sold goods for cash of Sh 27,000/=
5.Paid carriages sh 850/=
10. Cash sales sh 12,000/=
15. Bought goods for cash sh 25,000/=
18. Paid rent sh 1,200/=
20. Paid advertising sh. 1,200/=
22. Sold goods for cash sh. 15,000/=
25.Cash sales to date sh. 20,000/=
26.Paid wages goods for cash sh 500/=
27.Purchased goods for cash sh 500/=
28.Sold goods for cash sh 350/=
Record the transactions in the appropriate ledger account.