BOOKKEEPING

                                     DOUBLE ENTRY BOOKKEEPING

Each transaction is both debit - a deduction - into one account and a corresponding credit and also - in another. For example, if a company purchases some raw materials - materials and components used to make products - that will pay for a month later, debits the purchase account, and credits the vendor account. If the company sells an item on credit, it credits the account of sales, and payments, customer accounts. Thus the level of the products of the company stock account ready for sale is reduced, is charged to the securities account. There is a corresponding increase to its customers debtors who owe money for goods or services purchased and account receivables and accounts payable is credited. Each of the records into account debits and credits left to right. If the counters do their job properly, the total debits always equal total credits.

It is important to note that for greater control of records in a weekly summary on the book called "log books" at the end of each period is made a joint with all the information of the month in a single statement in which show all the accounts used

4.1 Match the words in the box with the definitions below. Look ar A and B opposite to help you.



Credit Ledger Debit  


Creditors Stock debtors  


1. Debit An amount entered on the left hand side of an account, recording money paid out

2. Ledger a book of accounts

3. Debtors customers who owe money for goods or services not yet paid for

4. Credit An amount entered on the right –hand side of an account, recording a payment received

5. stock Goods stored ready for sale

6. Creditors Suppliers who are owed money for purchases not yet paid for.

4.2 Complete the sentences. Look at A B and C opposite to help you.

1. The accounting of double heading shows where money comes from and where it goes: it is always transferred from one side to another one. Every event is entered twice – once as a credit and once as a debit

2. Most businesses record very frequent or numerous transactions in purchases and sales often record the transactions in day books or journal, and the put a daily or weekly summary in the main double - entry records

3. The main account books are called ledger and balance and the book relating to creditors is called the bought ledger

4. In order to prepare financial statements, companies do a Balance Sheet which copies all the debit and credit balances of different accounts onto a single page.

4.3 Complete the sentences using ‘debit’ or ‘credit’.

Look at A opposite to help you.

1. If you buy new asset, you credit the cash or capital account.

2. If you pay some bills, you debit the liabilities account.

3. If you buy materials from a supplier on 60 days credit, you debit the purchases account and credit the supplier’s account.

4. If you sell something to a customer who will pay 30 days later, you credit the sales account and debit the customer’s account.

DIANA GUTIERREZ

CAROLINA MARIN

ADRIANA LARA