Classify accounts before choosing a side
In double-entry accounting, debit does not simply mean an outgoing payment. Identify the account type and whether its balance rises or falls before selecting the debit or credit side.
ACCA explains transactions through their dual effect on the accounting equation. A useful worksheet has four columns: account, type, direction of change and entry. Check equal total debits and credits for each transaction.
Original practice: capital and equipment on credit
In this fictional exercise, an owner contributes 5,000 currency units: debit bank 5,000 and credit capital 5,000. Equipment costing 1,200 is then bought on credit: debit equipment 1,200 and credit payables 1,200. Ignore taxes.
Bank remains 5,000 and equipment is 1,200. Assets of 6,200 equal liabilities of 1,200 plus capital of 5,000. The credit purchase has not yet used cash.
Separate paying a payable from recognising an expense
Next pay the supplier 400: debit payables and credit bank. Bank becomes 4,600; equipment remains 1,200; payables become 800; capital remains 5,000.
Explain why settling the liability does not record the equipment purchase again. Then practise paying current-period rent of 200: debit rent expense and credit bank. This transaction affects profit, unlike simply repaying the equipment payable.
Check more than equal totals
A balanced trial balance does not prove that every entry is correct. Omitting an entire transaction or using the wrong accounts on both sides can leave it balanced. Trace entries back to the original facts.
Redo a similar unassessed exercise without looking at the answer. Bring the step you cannot explain to a tutorial and follow your university rules before sharing material. Assessed work must remain your own.
References
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