Page 88 - Book-keeping for Secondary Schools Student’s Book Form One

Book-Keeping for Secondary Schools

Activity 5.1

Read different reliable sources and then indicate whether the following accounts
are nominal, real or personal accounts.

No. Name of Account Classification
FOR ONLINE READING ONLY
1 Abela
2 Drawings
3 Advertising
4 Fixtures
5 Purchases returns
6 Motor van
7 Profit
8 Purchases
9 ABC Co. LTD

Posting entries to a ledger
Posting of entries to a ledger follows the double entry principle of Book-keeping. For
the case of a general journal, the journal entry would have already specified the name of
the accounts and amounts to be debited and credited for each transaction. In case of day
books or special journals, the journal entries do not give direct guidance on accounts
to be debited and credited. This means that for day books or special journals, one will
have to determine the nature of transactions recorded in the journal and use that to
apply double entry rules as to debiting or crediting the relevant ledger account.

The nature of transaction will be dictated by the nature of the journal and the name used
in the journal. This will in turn dictate the ledger accounts to which the journal entries
will be posted. When posting, a consideration will be made on the nature of the account
and the effect of the transaction as follows:

(a) The nature of the account
The posting will be made depending on what element of the accounting equation is
affected by the transaction. It is therefore important to identify whether the account to
be posted is for assets, liabilities, revenue, expenses or owner’s equity (capital).

(b) The effect of the transaction
Once it is known which element is affected by the transaction, it is important to establish
whether the transaction involves an increase or a decrease in that element. This will
help to decide whether the account identified in (a) above will be debited or credited.

80
Student’s Book Form One

Book Keeping Form 1 New 2024 FINAL.indd 80 18/10/2024 10:14