SUBJECT: BUSINESS STUDIES
TERM: 3RD TERM
TOPIC: DOUBLE ENTRY BOOK-KEEPING
The Double Entry principle: The double entry principle states that for every credit entry there must be a corresponding debit entry and vice versa.
For a proper understanding of this principle, it must be borne in mind that every business is a separate entity, and every account of a business is personified i.e. deemed to be capable of acting as a person and so can receive something and can give out something.
From the above explanation, it follows therefore that what one account gave out was received by another account. In accounting a giver is referred to as a creditor and a receiver is called a debtor. That is, any account that receives is a debtor and any account that gives is a creditor.
Example: Mr. Obi started a business with a cash of N10, 000 the double entry is debit cash account and credit capital account (2) sold goods for cash N1000 the double entry is debit cash account and credit sales account, etc.
Read Essential financial Accounting by O. A. Longer pages 9 to 12
WABP Business Studies JSS2 by Egbe Ehiametalor et al pages 96-107
© Lesson Notes All Rights Reserved 2023