The Accounts of the General Ledger BALANCE SHEET

The Accounts of the General Ledger BALANCE SHEET SECTION CAPITAL CREDIT (CR) + DEBIT (DR) + DRAWINGS + ASSETS - LIABILITIES + - NOMINAL SECTION - INCOME + EXPENSES Wamark Publishers © +

Transaction: Rendered a service and is receiving a delayed payment i. e. Current Income R 500 Assets Income Expense + + + Effect on Accounting Equation DR Debtors Control(A) Current Income CR 500 DR Current Income (I) CR Debtors Control 500 Debtors Control is an Asset which increases when a service is rendered without being paid immediately Current Income is an Income which increases Owners Equity A + 500 = = O/E +500 + L + 0 Wamark Publishers ©

Transaction: Credit Sales R 200, cost price R 150 Assets + DR Income + Debtors Control(A) CR Sales DR 200 Sales (I) CR Debtors Control 200 DR Trading Inventory (A) CR Cost of sales 150 DR Cost of Sales ( E) CR Trading Inventory 150 Expenses + Liabilities + Effect on Accounting Equation Debtors Control is an Asset that increases when a sale is made. Sales is an income. An income increases Owner’s Equity. A = O/E + L + 200 = + 200 + 0 Trading Inventory is an Asset which decreases when goods are sold. Cost of Sales (Cost Price) is an Expense which decreases Owner’s Equity A = O/E + L - 150 = - 150 + 0 What is the profit in Rands? Wamark Publishers ©

Transaction: Purchase stock on Credit e. g. R 700 Assets + - Income + Expense + Liabilities + DR Trading Inventory(A)CR Effect on Accounting Equation Creditors Control 700 Trading Inventory is an Asset which increases. Creditors Control is a Liability which increases DR Creditors Control (L)CR Trading Inventory 700 A = + 700 = O/E 0 + + L + 700 Wamark Publishers ©

Transaction: Making use of a service and paying at the end of the month e. g. Repairs R 700 Assets + - Income + Expense + DR Repairs (E) CR Creditors Control 700 DR Effect on Accounting Equation Repairs is an expense which decreases Owner’s Equity. Creditors Control is a Liability which increases Creditors Control (L)CR Repairs Liabilities + 700 A 0 = O/E + L = - 700 + +700 Note that the Accounting Equation is still balanced Wamark Publishers ©