Topics in AccountsCharacteristics of Double Entry System Examples on the Principle of Double Entry System Advantages and Limitations of the Double System in Accounting Scheme of work, Financial Accounting, SS1, Third Term Scheme of work, Financial Accounting, SS1, Second Term Scheme of work, Financial Accounting, SS1, First Term Differences between Bookkeeping and Accounting Journal - Contents, Format, Characteristics and Advantages of Journal Bank Wire and Wire Transfer Chart of Accounts Meaning, Importance, Processes, Examples and Steps in Balance Sheet Reconciliations
Academic Questions in Accounts
The debited and credited accounts are written in which column of a journal?
F. None of the above
A journal may also be referred to any of the following except _____.
A. Book of original entry
B. Book of primary entry
C. Book of first entry
D. Initial book
E. Day book
F. Chronological book
Which of the following statement is true concerning bank wire?
A. Another name for bank wire is cash transfer
B. The term 'wire' in bank wire signifies a computer based programmed message sent to a bank customer in regards to their account information, transaction and other important financial notifications
C. The International Bank Account Number (IBAN) must always be involved when carrying out a bank wire process
D. The term bank wire has no significant relationship with wire transfer
E. Cyber criminals cannot utilize bank wire threats like CSRS, phishing and whaling to achieve their fradulent act
F. All the above statements are true
The following are recommendations to follow during the process of balance sheet reconciliation EXCEPT _____.
A. All balance sheet accounts should be reconciled periodically, quarterly or annually
B. Comparing the trial balance of both the payables and receivables with the respective aging schedule
C. Analysis of enteries and relocating them to a sub-ledger if need be
D. Comparing the general ledger trial balance of the account to another source; for instance, a bank statement
E. Analysis of the differences in both accounts and making appropriate correction to ensure the correctness of entered information
F. None of the above
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The principle of double entry system is an important aspect of accounting. It states that:
For every debit, there must be a corresponding credit for an equal amount of money; and for every credit, there is a corresponding debit for an equal amount of money.
In simple terms, whatever is recorded on the debit side must be equivalent or equal to that recorded on the credit side of the account. This implies that the debit must always be equal to the credit in a dual entry system.
The debit and credit sides make up the transactional aspects that are identified under the principle of double entry. The debit side of the transaction (abbreviated as Dr) is always present on the left side of the account while the credit side of the transaction (abbreviated as Cr) is written to its right.
Note: The process of keeping an account of dual entry (corresponding Debit and Credit) is referred to as dual or double entry system of accounting.
To get a better understanding on the characteristics of the double entry system, it's a good idea if we first understood the concepts (or characteristics) of Debit (Dr) and Credit (Cr) sides of an account. They are summarized below:
The above characteristics of the Debit and Credit sides of an account are summarized in the image below:
Below are the characteristics or fundamental principles of Double Entry System:
Two parties are required. They are the giver and the receiver. The party the gives out (money) is credited while that which receives the money is debited.
There are two sides of the account; (Duality of Account). These are the Debit and Credit sides.
The exchange is equal in amount. This implies that the amount of money given is equal to the amount of money received in any transaction.
The sum or totality of the debit is equal to the totality of credit. To this end, there's always an equal result on both sides of the account.
It is a scientific and complete accounting system.
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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.
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Amazing facts in Accounts
It is believed that Bookkeeping is the only English word to contain three sets of double letters repeatedly.please read our article on bookkeeping vs Accounting here
NOTABLE POINTS IN Accounts