Why do we have double entry- accounting ? Why do we put in everything twice ? why not once ?
Double entry accounting is mainly used for bookkeeping however a better example which I understood would be a customer purchases a car and their asset would increase as they now own a car but their cash at the bank decreases as they have to pay for the car.
I couldn't get my head around the dentition , as I couldn't put it into words or even understand it however by using an example of car made it so much more easier to understand the concepts of double - entry accounting.
Three Assets - An asset increases the value within a business
1) Inventories
2) Property, Plants and equipment
3) Trade and other receivable
Three Liabilities - liabilities are financial payments which a firm may owe to banks or suppliers
1) Other financial liabilities
2) Provision
3) Income tax Payable
Three Equities - Equity is the value of shares within a company
1) Contributed Equity
2) Reverses
3) Accumulated losses
No comments:
Post a Comment