Describe the Double Entry System.

Describe the Double Entry System.

Answers

Accounting equation forms the basis of the double entry system. Change in a business involving Assets, Liabilities or Capital MUST have an effect that is interrelated to the three components of the accounting equation. This is known as a double effect such that assets will always be equal to liabilities plus capital. For Example if the owners of a business enterprise put in additional capital into the business via bank, this will increase the cash at bank and the capital amount will also increase hence the equation is still maintained.
According to the accounting equation if all assets are represented by liabilities and capital then all debit entries should be the same as credit entries.

---

Kavungya answered the question on August 17, 2021 at 07:24

Next: The following assets and liabilities are owned by Jacob a sole trader as at 01/01/2013. The following transactions were also captured during the financial period that...
Previous: Describe the Debit and Credit Entries.

View More Financial Accounting Questions and Answers | Return to Questions Index

Exams With Marking Schemes

• Grade 1
• Grade 2
• Grade 3
• Grade 4
• Grade 5
• Grade 6
• Grade 7
• Grade 8
• Grade 9
• PP1
• PP2
• Playgroup
• Form 1
• Form 2
• Form 3
• Form 4

Related Questions

• The following assets and liabilities are owned by Jacob a sole trader as at 01/01/2013. The following transactions were also captured during the financial period that...(Solved)
  

  The following assets and liabilities are owned by Jacob a sole trader as at 01/01/2013.
  .Ksh
  Accounts payable 56,500
  Machinery 150,000
  Motor Vehicle 260,600
  Stock 105,000
  Accounts receivable 155,700
  Bank 90,000
  Cash 34,000
  
  The following transactions were also captured during the financial period that ended 31/12/2013.
  a) A new machine was purchased on credit worth Ksh 21,500.
  b) Additional stock for Ksh 64,000 was purchased via bank.
  c) Creditors were partly settled by payment of Ksh 20,000 by cheque.
  d) The current debtors paid their account by Ksh 72,000 on cash.
  e) Jacob deposited Ksh 5,000 into the bank account as capital.
  
  Required:
  i. Determine the capital amount for the business at the beginning of the financial period.
  ii. Extract a trial balance that captures all the transactions reported.

  Date posted: August 17, 2021.  Answers (1)

• The following information relates to Alpha traders as at 31^st December 20x3. You are required to prepare a balance sheet as at that date.(Solved)
  

  The following information relates to Alpha traders as at 31^st December 20x3. You are required to prepare a balance sheet as at that date.
  

  Date posted: August 17, 2021.  Answers (1)

• Describe the Accounting Equation.(Solved)
  

  Describe the Accounting Equation.

  Date posted: August 17, 2021.  Answers (1)