Accounting

Books of First Entry Across the Business Studies Course

They appear all over the Buisness Studies course: Section A, parts b & c in long questions and Q1 Paper 2 (Higher Level). Students who do these questions well, tend to score highly and also do well in the Final Accounts question.

In Section A – Double-entry book keeping questions appear in a number of different ways.

Ledger Accounts

There are two parts/accounts for each transaction. Students are asked to name the account and decide which side, whether it is on the Debit or Credit side.

Example

Daly Ltd purchased equipment by cheque.

Account 1 ____Equipment Account________(Debit side)_____

Account 2 ____Bank Account_____________(Credit side)_____

When goods are purchased or sold there are three main ways of payment:

1. Bank Account (watch out for the words “lodged” or “cheque”)

2. Cash Account

3. Credit

All Assets should be recorded in an account named after the asset e.g. Machinery Account

All expenses should be recorded in an account named after the expense e.g. Insurance Account

All goods purchased should be recorded in an account called Purchases Account.

All goods sold should be recorded in an account called Sales Account.

The same rule applies to goods returned e.g Sales Returns Account and Purchases Returns Account.

Example 2008 Paper Section A

[pic]

Credit Transactions

This applies where goods are bought and sold ON CREDIT. This means goods are bought or sold now and payment is not received till a later date.

The following is how to treat credit transactions

Selling on Credit Sales Account and Debtors Account

Buying on Credit Purchases A/C and Creditors Account

Returning goods to Creditor Purchases Returns Account and Creditors Account

Goods returned by a Debtor Sales Returns A/C and Debtors A/C

|Transaction |Debit |Credit |...