THE DOUBLE ENTRY BOOK –KEEPING; PRINCIPLE AND RULES REGARDING POSTING

The double entry book-keeping was introduced in 1894  by Luca Pacioli . He is an Italian,  a rev, and a mathematician. The double   entry principle states that  in every  debit entry, there must be a corresponding credit  entry and vice versa. That is to say where  there is a giver,  there must be a receiver. It    further state that every transaction has a dual  aspect  (receiver)  debit and  credit( giver).


Ie  to say that  every transaction that is to be recorded in the  book of account, should be recorded twice.  An   account is opened for both the giver and receiver of value . the  accounts that receives value is debited while the accounts that gives out  value is credited. i.e  debit the
receiver, and credit the giver with the value of the  transactions involved. In applying the   double   entry principle, the following procedural steps    must be followed:
1.      analyze the transaction and identify the two accounts involved
2.        write up  the  account by identifying the receiver  of value with the amount received and crediting  the giver of value with the value given up  ie debit the receiver and credit the giver


Examples
1.      a  trader buyers  goods for  resale and paid cash  
    account  involved:  purchases ac (receiver of value )  and cash  account (given to value)
action required:  debit purchases account in the ledger  credit cash account  
2.      a  trader buys goods from Ndife Blessing on credit . Account involved: Purchases account (receiver of value)  and  Ndife Blessings  account (giver of value)  action  required:  debit purchases  account, credit  ndife  blessings  account
3.      a trader sells goods for cash 
Action Involved:  Sales account (giver of value  and cash account (receiver  of value ) 
Action Required:  Debit cash account (cash book) and credit   sales account in the ledger  
4.      A businessman pays for  advertising in cash.  
Action involved: advertising  account (receiver   of value ) and cash account (giver of value) 
Action  required: debit  advertising account and  credit cash account 
In  general: Assets are debited and  liabilities credited 
-         loses are debited  and profit credited
-         expenses a debited and income credited. 
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