Business Studies - Junior Secondary 1 - Double entry book-keeping

TERM: 3^RD TERM

WEEK THREE

Class: Junior Secondary School 1

Age: 12 years

Duration: 40 minutes of 5 periods each

Date:

Subject: BUSINESS STUDIES

Topic:  DOUBLE ENTRY BOOK –KEEPING

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

 I.) State the Meaning of Double Entry Book Keeping

 II.) Double Entry Treatment of Assets Liabilities, Treatment of Expenses

 III.) Analyse events and Transaction using Double Entry System

 IV.) Match Debit Entry with Corresponding Credit Entry.

 V.) Meaning of Journals

 V.) Meaning of Ledger

 VI.) Classes of Ledger

VII.) Classification of Accounts

 IX.) Identify accounts to credited and accounts to be debited

 X.) Post from journals to ledgers

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures,

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

 DOUBLE ENTRY BOOK –KEEPING

Double-entry bookkeeping is a system of accounting where every transaction affects at least two accounts: one account is debited, and another account is credited by an equal amount. This system ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced after each transaction.

Double Entry Treatment

1. Assets:

   - Increase: Debit asset account.

   - Decrease: Credit asset account.  

2. Liabilities:

   - Increase: Credit liability account.

   - Decrease: Debit liability account.  

3. Expenses:

   - Increase: Debit expense account.

   - Decrease: Credit expense account.

Analyzing Events and Transactions using Double-Entry System

When analyzing events and transactions using the double-entry system:

I.) Identify the accounts affected by the transaction.

II.) Determine whether each account will be debited or credited based on the nature of the transaction.

III.) Ensure that total debits equal total credits for each transaction to maintain balance.

Matching Debit Entry with Corresponding Credit Entry

In double-entry bookkeeping, every debit entry must have a corresponding credit entry of equal amount. For example:

- If cash is received (debit Cash account), an equal amount is credited to the Revenue account.

Meaning of Journals

A journal is a chronological record of financial transactions, where each transaction is initially recorded before being transferred to the ledger. It includes details such as dates, accounts debited and credited, descriptions of transactions, and amounts involved.

Meaning of Ledger

A ledger is a collection of accounts that records all transactions related to specific categories (assets, liabilities, equity, revenues, expenses). It provides a summary of all transactions affecting each account and their balances.

Classes of Ledger

Ledgers can be classified into several types based on the types of accounts they contain:

1. General Ledger: Contains all accounts used by a business, including assets, liabilities, equity, revenues, and expenses.
2. Subsidiary Ledger: Contains detailed information for specific accounts, such as accounts receivable or accounts payable, providing a breakdown of transactions.

Classification of Accounts

Accounts can be classified into different categories based on their nature and purpose:

1. Asset Accounts: Record resources owned by the business (e.g., cash, inventory, equipment).
2. Liability Accounts: Record obligations or debts owed by the business (e.g., accounts payable, loans).
3. Equity Accounts: Record owner's equity or shareholders' equity in the business.
4. Revenue Accounts: Record income earned from business operations (e.g., sales revenue, service revenue).
5. Expense Accounts: Record costs incurred in generating revenue (e.g., rent expense, salaries expense).

Accounts to be Credited and Debited

Determining which accounts to debit and credit depends on the transaction:

- Debit: Increase in assets, expenses, and dividends. Decrease in liabilities and revenues.

- Credit: Increase in liabilities, revenues, and equity. Decrease in assets and expenses.

Posting from Journals to Ledgers

To post from journals to ledgers:

1. Select the Correct Ledger Account: Choose the ledger account affected by the transaction.
2. Post Debit and Credit Entries: Enter the debit amount in the debit column and the credit amount in the credit column of the appropriate ledger account.
3. Date and Description: Record the date and a brief description of the transaction to provide context.
4. Calculate New Balances: Calculate new balances after posting each transaction to ensure accuracy and balance in the ledger.

   EVALUATION: 1. State the Meaning of Double Entry Book Keeping

2. Analyse events and Transaction using Double Entry System
3.   What is the meaning of Journals
4. Define ledger
5. Explain how you can post from journals to ledgers

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively