Double Entry - No Worry!
Double entry bookkeeping is simply a method by which every transaction is recorded by entries to two or more accounts, where the total of the debits (Dr) is equal to the total of the credits (Cr). The concept of what accounts usually attract a Dr and which usually attract a Cr is sometimes confusing. The table below represents all possible situations:
Type Of Account Increasing amount is: Decreasing amount is:
Asset Dr Cr
Liability Cr Dr
Equity Cr Dr
Income Cr Dr
Expense Dr Cr
Examples:
A payment for a $100 telephone bill is made from the bank account. The entry is:
Telephone expense (expense increasing) Dr $100
Bank Account (asset decreasing) Cr $100
A sale of goods for $250 is made to a customer on account. The entry is:
Accounts Receivable (asset increasing) Dr $250
Sales (income increasing) Cr $250
A new computer is purchased on a business credit card for $3000. The entry is:
Fixed Assets - Computer (asset increasing) Dr $3,000
Credit Card (liability increasing) Cr $3,000
Related Tags: bookkeeping, quickbooks, myob, manual bookkeeping, double entry
Mitchell Holmes CPA is based in Cairns Australia and is the owner of management consulting website http://www.fixmybusiness.com.au and online accessories store http://www.sublimeaccessories.com.au
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