[James004]

I've been doing the past papers and questions ready for the exam. But I'm really confused about which side entries should be posted.

I understand the duality concept but I don't understand fully which side the entries should be posted to. I.e in the cash book and the ledgers. Is there a good general rule which can be applied. I've heard of Debit Expenses Assets Drawings, Credit Liabilities Income Capital. (Dead Clic) but this rule doesn't seem to apply to every entry. I.e is sales a reduction of an asset (stock) or a increase in an asset (cash). And purchases should be an increase of an (asset) but reduction in an asset (cash).

Could anyone help me understand which side to post the entries please

I appreciate any replies.

[lalaland]

(Original post by James004)
I've been doing the past papers and questions ready for the exam. But I'm really confused about which side entries should be posted.

I understand the duality concept but I don't understand fully which side the entries should be posted to. I.e in the cash book and the ledgers. Is there a good general rule which can be applied. I've heard of Debit Expenses Assets Drawings, Credit Liabilities Income Capital. (Dead Clic) but this rule doesn't seem to apply to every entry. I.e is sales a reduction of an asset (stock) or a increase in an asset (cash). And purchases should be an increase of an (asset) but reduction in an asset (cash).

Could anyone help me understand which side to post the entries please

I appreciate any replies.

Hi there!

If you're doing entries in the cash book they are the right way round i.e how you would expect the entries to be. For example, if you paid a supplier £500 by cheque, you would credit the bank column in the cashbook.

If you're doing a Purchase or Sales Ledger control account the entries are a little different. For a Sales ledger control account, the entries on the debit side INCREASE how much your debtors owe you. Where as on the credit side, the entries DECREASE how much the debtors owe you.

A couple of examples are the sales day book total. You've sold those goods to customers therefore they owe you more money hence the amount is debited. A returned cheque will also appear on the debit side as the customer still owes you that amount. Some examples on the credit side would be return inwards. The customer has returned goods to you therefore they are reducing how much they owe you.

For a purchase ledger control account, the entries made on the debit side DECREASE your liabilities whereas on the credit side, the entries INCREASE you liabilities to the suppliers.

Some examples that would decrease your liabilities would be payment made to suppliers or discount received. Entries on the credit side may include purchases as since you bought more goods, you owe more money to the suppliers.

The entries made in the control account mirror the entries made in the sales or purchase ledger. So if you forget how to complete a sales or purchase ledger account, think about the entries in the control account. Or alternatively, the entries made in the General ledger are how you would expect them to be. For example, the total of sales is posted to the credit side in the general ledger. Therefore the double entry must be completed by posting the sales on the debit side on the customers account.

Hope this helps and good luck for your exam; I too have an accounts exam tomorrow!

[yayifications]

How did you both find the exam?
I was retaking & found it pretty nice, my balance sheet balanced which never happens for me!

[lalaland]

Yeah my balance sheet balanced too! Though not sure if I got it right...looking around the forum, it appears other people got theirs to balance but at a different figure. :/

[ericwong13]

Mine Didn't balance was off £200 :'( for the rents and insurance additional info it didn't affect the Profit or Loss does it ?

[omgg]

(Original post by lalaland)
Yeah my balance sheet balanced too! Though not sure if I got it right...looking around the forum, it appears other people got theirs to balance but at a different figure. :/

what figure did yours balance at?

[lalaland]

(Original post by omgg)
what figure did yours balance at?

59 thousand and something... sorry I can't be more exact - I have terrible memory.

[yayifications]

I did it wrong and didn't think rents and rates changed anything but it did, but only for one month's worth of accruals.

Mine balanced at 59990.

[ossR]

Mine balanced at 59455

[yayifications]

(Original post by ossR)
Mine balanced at 59455

That sounds about right, hopefully I won't lose too many marks.

[Genius434]

Mine balanced at 66,710 8|

[jaankii.]

How did mine balance at 41714 - something around that figure anyway?! soo many people in my college got different answers which balanced, surely only one profit for the year would balance the balance sheet considering the capital for everyone would be the same..

[ammar shabbir]

Surely the balancing figure on the balance sheet was like 64, 680 or 68, 640 cant remember which way around, did you get rid of the bank overdraft by using the 10,000 capital the over draft was 6,1?? and then you get a positive bank figure in current assets of like 3,??? + with the the prepayment on the insurance should have been 660 you were working it out for only 2 months and the rent and rates were pre-paid for 5 months the as the 1st was in fact already paid for in the month April 1 - April 30th and as the information was prepared on the 30th April your left with only 5 months out of the 6?

[ammar shabbir]

64, 480*

[yayifications]

(Original post by ammar shabbir)
Surely the balancing figure on the balance sheet was like 64, 680 or 68, 640 cant remember which way around, did you get rid of the bank overdraft by using the 10,000 capital the over draft was 6,1?? and then you get a positive bank figure in current assets of like 3,??? + with the the prepayment on the insurance should have been 660 you were working it out for only 2 months and the rent and rates were pre-paid for 5 months the as the 1st was in fact already paid for in the month April 1 - April 30th and as the information was prepared on the 30th April your left with only 5 months out of the 6?

That all sounds correct (except I missed out the accrual -_-) but how did you arrive at such a high figure of 64,xxx? I got 59990 and only missed out the accrual which was like 1000 at most, so there's still another 5000 floating around somewhere? s: There was depreciation also I think.

[ammar shabbir]

Depreciation was around 3360 or so beacuse it was 26500 - 5600 i think divide that by 6 years so something like 3??? erm i didnt actually get an accrual, i believe that they were both prepayments the insurance was deffo pre paid and the rent and rates it said "Had been paid for the six months to september 2012" so it can't possibly be an accrual the accrual was 2580 or something like that which gives you the missing 5000 haha

[ammar shabbir]

i mean the prepayment was 2580*

[yayifications]

(Original post by ammar shabbir)
Depreciation was around 3360 or so beacuse it was 26500 - 5600 i think divide that by 6 years so something like 3??? erm i didnt actually get an accrual, i believe that they were both prepayments the insurance was deffo pre paid and the rent and rates it said "Had been paid for the six months to september 2012" so it can't possibly be an accrual the accrual was 2580 or something like that which gives you the missing 5000 haha

But still, if I only missed out the rents and rates figure, why did yours balance at 64xxx and mine at 59xxx? LOL s:

[ammar shabbir]

Hmm, let's see what else there, did you remember to add the depreciation to the provision for motor vehicle then take that away from the cost to get N.B.V for the fixed assets? did you include all of the expenses, there was a motor running expense, discount allowed, depreciation, rent and rates, insurance i think that was all of them. What was your Net profit figure?

[ammar shabbir]

+ you didn't change the drawings figure did you ?