Chapter 3 Double Entry Recording of Business Transaction

Sequence of recording transaction Source documents e. g. receipt, invoice 5 basic accounting elements Record down in respective accounts

Double Entry Recording Owners' equity Assets Liabilities

Every transaction must have 2 effects; for every transaction, at least 2 accounts will be affected Total debits recorded must be equal to total credits recorded for every transaction; left and right side of the accounts must be equal

Accounts Classified into 5 basic accounting elements: Assets, Liabilities, Owners' Equity, Expenses, Income Increases are recorded in one side of an account and decreases are being recorded down in the other side of the account If the total debit value exceeds its total credit value, the account is said to have a debit balance. If the total credit value exceeds its total debit value, the accounts is said to have a credit balance