Page 48 - Book-keeping for Secondary Schools Student’s Book Form One

Book-Keeping for Secondary Schools

Assures arithmetic accuracy in the accounts thus minimising the possibility of errors
Since the double entry system of Book-keeping requires every debit to have a
corresponding credit entry, the arithmetic accuracy of the books of accounts is assured.
The arithmetic accuracy in the accounts is further assured by the preparation of the trial
balance periodically or at the end of the accounting period.

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The basis of the balances used in preparing the financial statements
Balances used in preparing the trial balance and eventually in the financial statements
are extracted from ledger accounts. It should be noted that the posting of entries in the
ledger accounts follows the double entry system of Book-keeping. In this regard, double
entry system ensures the preparation of the trial balance and financial statements.

Ensures that financial records are kept properly
Double entry ensures that financial records are kept permanently and properly in the
books of accounts. This is because entries in the ledger accounts are posted using the
double entry system of Book-keeping.

Activity 3.2

Your friend, Zawadi has approached you to clarify an important aspect in Book-
keeping. She has heard you speaking about double entry, and she believes that the
use of double entry will:
1. Double the work of the book-keeper and thus, spend more resources of the
enterprise;
2. Encourage recording transactions twice, which is misleading as it doubles
the amounts reported; thus, some kind of cheating may occur.
Prepare a short presentation that you will use to explain to her the double entry

system and show its benefits to the enterprise.

Summary
The principle of double entry is a fundamental concept in accounting and book-keeping.
It ensures that every financial transaction has an equal and opposite effect on at least
two accounts. This system is widely used in maintaining accurate and balanced financial
records. By following the double entry system, businesses can achieve logically organised
records that can be used in preparing financial statements. This, in turn, enables them
to analyse their financial performance, financial position and cashflow make informed
decisions, and meet reporting requirements. The application of the principle of double
entry provides a strong and consistent framework for recording financial transactions,
helping businesses to maintain a clear and accurate representation of their financial
activities and facilitating effective financial management.

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Student’s Book Form One

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