The Double Entry System

– Debit Credit Rules

By: We Are Accountants
Points to learn

• Double entry follows the rules of the accounting

equation
• Double entry maintains the principle that every debit
has a corresponding credit entry.
• Double entries are made in accounts in the
accounting books
• Why each transaction is entered into accounts rather
than directly into the balance sheet
• How transaction cause increase and decrease in
elements of accounting
• How to record transactions in T – Accounts
Paid
A
TheVanthe
owner
is amount
bought
startsowing
for
the to
$4,500Shop
business
onFitters
Fixtures are bought on credit from Shop2with
nd
Problem
in cash
August,
Fitters on
$10,000 2018
for 17th August,
in cash
$1,250 on on 1st2018
August,
3rd August, 2018 2018 Solving

Cash Capital Van

a. 10,000 b. 4,500 c/d 10,000 a. 10,000 b. 4,500 c/d 4,500

d. 1,250
c/d 4,250

10,000 10,000 10,000 10,000 4,500 4,500

Fixtures Shop Fitters

Elements Increase Decrease

Assets DR CR c. 1,250 c/d 1,250 d. 1,250 c. 1,250

Liabilities CR DR

Capital CR DR
Expense DR CR
1,250 1,250 1,250 1,250
Revenue CR DR
Debit – Credit Rules

E I D

A DR CR

L CR DR

C CR DR

E DR CR

R CR DR
Points learned

• Double entry follows the rules of the accounting

equation
• Double entry maintains the principle that every debit
has a corresponding credit entry.
• Double entries are made in accounts in the
accounting books
• Why each transaction is entered into accounts rather
than directly into the balance sheet
• How transaction cause increase and decrease in
elements of accounting
• How to record transactions in T – Accounts