So you wanna be an accountant?

Monday 16 February 2015

So you wanna learn double entry ?

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
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Email: donnellynicola7@gmail.com







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