DOUBLE-ENTRY SYSTEM AND TRIAL BALANCE

PATRIOT ODUNARO BABATUNDE JIMOH     (08038454008)

(Nothing is more noble than helping others)

                                     










 
DOUBLE ENTRY PRINCIPLE

The double entry principle is methods of record- keeping by which at least two effect of each transaction are recorded. The purpose of the double entry principle is to bring out clearly the dual effects of transactions to an entity. 

The fundamental principle states that “for every debit entry there must be a corresponding credit entry and vice-versa”.

According to Luca Pacioli , the rules of double entry are:

i.        The keeping of books of accounts

ii.      The division of each book into separate accounts

iii.    Each account is divided into two halves, left hand side which is the debit side(Dr) and right hand side which is the credit side (Cr)

iv.    All transactions must be recorded in two accounts, one account is debited and another account is credited.

v.      The Giver (Giving account) is credited with the value of the items or goods and the Receiver (Receiving account) is debited with the same amount.

vi.    Each entry in the debit or credit must contain three things viz: the day of payment, the amount of payment and the reason for the entry.

Having shed light on double-entry system, let us look at its advantages.

The followings are the advantages of double entry book-keeping system:

i.          It provides a complete record of every transaction from both personal and impersonal.

ii.        It makes for ease of tracing the two components of transactions i.e. posting are cross

       referenced to each other.

iii.      It makes complete the records of each other.

iv.      It provides an arithmetical check on the records since the total of the debit entries must

       equal the total of the credit entries.

v.        From the personal accounts the amounts owing to and by each person with whom the

      business deals can at any time be ascertained.

Let us look at an illustration that will show double-entry system. 

So, let look at the solutions as follows:

 

Let quick look at an illustration that will show a trial balance.

Illustration 2: 

The information in illustration 1 above remain the same. 

Required: Extract a trial balance for Ninalowo Nigeria Limited as at that date.

Solution:

To learn more contact Patriot Odunaro Babatunde Jimoh.

Assignment Questions to be submitted to objunityonline@gmail.com for grading:

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