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    Help with double entry accounts?! Eimearrogers

    Test tomorrow and I'm soooooo dead!!

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      Remember picture it going in on an analysed cashbook. then swap sides. E.G Dr. on cashbook = Cr.on ledger

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      think about it logically. put yourself in the position of the company and think whether it is something worth money to you(asset), something you paid for(expense), something you owe(liability), or something given to you(gain). once you work this out follow the form of AE=+ -, LG=-+ -

      e.g jones ltd sold goods on credit of 45,000 to kirby ltd.

      jones ltd also bought goods on credit from watson ltd of 25,000

      imagine you are jones ltd. first lets look at kirby ltd. you bought goods off them. this means you owe them 45,000 and makes them a creditor and the ledger a liability. L= -+ i.e dr= - cr=+. you owe them more money,so it goes on the plus side(cr)

      now lets look at watson ltd. they bought goods off you and therefore OWE you money. this makes them a debtor and the ledger is an asset,as the money they owe you is worth something to you. this means the ledger is dr= + cr= -. the 25000 goes on the + side as they owe you more money.

      should watson ltd pay you some money e.g 5,000. This means they owe you less money as they have paid back some of their debt. this means it goes on the - side of their account, which is already labbeled. you then balance that account to be 20,000 by taking the smaller side from the bigger side.

      By thinking it through logically, you can work out each ledger.

      e.g money in bank is worth something to you so it is an asset

      wages is an expense as you must pay it.

      hope this helped! :)

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      sorry i realised i made a typo at the beginning. LG= -+*

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      oops, i mixed up the names. the explanation for kirby ltd is the explanation for watson ltd and vice versa. so sorry for the confusion!

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