Page 47 - Book-keeping for Secondary Schools Student’s Book Form One

Application of the double entry system

(iii) Sales of furniture for cash
(iv) Goods sold for cash
(v) A proprietor invested amount of cash in business

Solution
FOR ONLINE READING ONLY
No Transaction Account Debited and Credited Effect

(i) Amount received from Dr. Bank account Increase in asset
debtor by cheque
Cr. Receivables account Decrease in asset

(ii) Purchased a motor van on Dr. Motor van account Increase in asset
credit
Cr. Payables account Increase in liability
(iii) Sales of furniture for cash Dr. Cash account Increase in asset

Cr. Furniture account Decrease in asset

(iv) Goods sold for cash Dr. Cash account Increase in asset
Cr. Sales account Decrease in asset

(v) A proprietor invested Dr. Cash account Increase in asset
amount of cash in business
Cr. Capital account Increase in capital

Activity 3.1

There are different types of accounts. By using various reliables sources from
the internet and books, briefly write short notes about personal accounts, real
accounts and nominal accounts.

Importance of double entry
The use of the double entry system is important in accounting process due to the
following reasons:

Makes it easier to show the two effects of each transaction
The double entry system of Book-keeping requires every transaction to be recorded
twice. That is, every debit entry should have its corresponding credit entry. For this
reason, the double entry system of Book-keeping makes it easier for anyone analysing
the business transaction to understand which of the two items or accounts have been
affected by the transaction.

39

Book Keeping Form 1 New 2024 FINAL.indd 39 18/10/2024 10:14