BASIC FOUNDATION OF ACCOUNTING: EDXPERT LESSON
-The basics of accounting accounts for every transaction that is processed in the
business.
-With the double entry system, you need to show, that for every credit entry you
make, there is a debit entry that needs to be shown.
-Below is the basic accounting equation:
A = L+ E
A = assets = increases on debit side, decreases
on credit side
L = Liabilities = increases on the credit side,
decreases on debit side
E = Equity = increases on the credit side,
decreases on debit side.
The next page will have a few exercises to demonstrate what we discussed during our
lesson.
1. You bought vehicle for cash at a cost of R45 000
2. You bought a vehicle on credit at a cost of R80 000. Interest on vehicle is at 6% per
year.
3. You made sales to the amount of R650 000 for the year.
4. You made a cash payment of R48000 for water and electricity.
5. You received rent income of R60 000 for the year.
Account for these above examples by doing the double entry system . Show if amount
should be debited/ credited.
Description
1.
DEBIT
Vehicle
CREDIT
Bank
Amount
R45 000