Basic rules of Double Entry Bookkeeping

Double entry bookkeeping is the method used to transfer our weekly or monthly totals from our books of original entry into the nominal ledger.

Basic rule to remember is that:-
EVERY FINANCAL TRANSACTION gives RISE TO TWO ACCOUNTING ENTRIES, ONE A DEBIT AND THE OTHER A CREDIT.

Also note that:
(a) An increase in an expense ( example rent) or an increase in an asset ( office furniture) is a DEBIT
(b) An increase in revenue ( example sale of goods or services) or an increase in a liability( buying goods or service on credit) is a CREDIT
(c) A decrease in an asset( example making a cash payment) is a CREDIT
(d) A decrease in liability( example paying a creditor) is a DEBIT

EXAMPLES
(a) Purchase of office equipment
DEBIT: Office Equipment ( increase in asset)
CREDIT: Cash at bank ( decrease in asset re: cash at bank decreases)

(b) Purchase of stationery on credit
CREDIT: Accounts Payable ( increase in liability )
DEBIT: Purchases ( item of expense)

© Payment received from a credit customer
CREDIT: Accounts receivable ( decrease in asset)
DEBIT : Cash at bank ( increase in asset)

Related posts:

1. Bookkeeping Double Entry Rules For Accounting of Fixed Assets and Depreciation
2. BOOKKEEPING DOUBLE ENTRY RULES/PRINCIPLES for BAD DEBTS RECOVERED:
3. Revision Notes: Debit And Credit Rules
4. Bookkeeping Test Question And Answer on Books of Original Entry
5. Accounting Test Question No 1 & 2 On Accounting Process & Accounting Principles