Lesson 1 Double Entry Bookkeeping:
When I first began to study AAT I found the trickiest thing for
most of the students was remembering the Double entry. It doesn't matter which
position you have in finance, if you don't know your debits and credits you
will struggle!
Most accountancy packages post Invoices
for you so this can be done without basic knowledge, but as soon as you begin
to post journals or reconcile balance sheets you need to understand the basics.
The following acronyms really helped me
whilst studying for my first few exams:
PALED
& CLIPS
Debit
|
Credit
|
P-Purchases
|
C-Capital
|
A-Assets
|
L-Liability’s
|
L-Losses
|
I-Income
|
E-Expenses
|
P-Profit
|
D-Drawings
|
S-Sales
|
If you imagine your trial balance as
the table above Debits to the left, credits to the right. For every debit there
must be a credit, a balancing figure.
Remember that Purchases for example are a Debit, the VAT relating
to the purchase is also a debit therefore the credit, and the balancing figure
is the Purchase ledger Control. A good
way to remember this is:
The
Whole amount goes to the control account!
Another thing that helped me to remember was the mantra:
“If
in doubt T account”
Debit: Purchase
Ledger Control Credit:
Purchases
£100
|
Debit: Purchase Credit:
Purchases £80
|
Debit: VAT Credit:
Purchases £20
|
Even whilst I have been studying CIMA I use this mantra, last year
when I studied F1 and currently when studying F2. I would not be able to work
out the balances for my cash flow statements without a T Account
I hope this blog helps with any Double Entry issues, If you have any questions please do not hesitate to contant myself
Thanks again for reading
Nicola Cima Dip MA
Facebook: So you wanna be an accountant?
https://twitter.com/AccountantLive
www,wannabeanaccountant.co.uk
Email: donnellynicola7@gmail.com
Facebook: So you wanna be an accountant?
https://twitter.com/AccountantLive
www,wannabeanaccountant.co.uk
Email: donnellynicola7@gmail.com
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