double entry book keeping
dragonfly
Registered Posts: 2 New contributor 🐸
is there some way of remmbering the art of double entry book keeping pls
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Comments
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Money into the bank is a debit.
Remember that, and everything else falls into place.0 -
PEARLS and DEADCLIC
Purchases, Expenses, Assets = debit
Revenue, liabilities, sales = credit
DEBIT
Expenses
Assets
Debtors/Drawings
CREDIT
Liabilities
Income
Creditors/Capital1 -
DEAD CLIC was the one that worked for me.0
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Dr & Cr
Debits - Assets & Losses (losses focusing on expenses)
Credits- Liabilities & Profits (profits focusing on sales, income)0 -
Money into the bank is a debit.
Remember that, and everything else falls into place.
I agree! I prefer a simple method.
I practiced with numerous T accounts, running through simple transactions. Once you do a few you'll get you're head around it. Then move on to sale of capital assets
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ThanksI agree! I prefer a simple method.
I never got on with Pearls or Dead Clic, but then that's just me.
I should expand on my previous to say that money into the bank is a debit, and there will always be an equal credit for each debit.
With that said.....
If you remember money into the bank is a debit, and that having money in the bank is an asset, then you know that assets are debits. Therefore liabilities must be credits.
If you know you received money from a sale, and it was banked, then you know that the sale must be a credit, as the money into the bank was a debit.
If money into the bank is a debit, then money out must be a credit. Therefore if I paid out money to my phone bill, it must be credit bank and debit phone expense, therefore expenses are debits.
I like the logical approach!0 -
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Fireraiser wrote: »They're not the same thing. Common sense it what tells us that the world is flat. Logic proves that it's round (well, OK an oblate spheroid)
Nar common sence tells you the world must be round or you would fall off the edge where as logic backs that up - its all down to interpritation0 -
Thanks
I never got on with Pearls or Dead Clic, but then that's just me.
I should expand on my previous to say that money into the bank is a debit, and there will always be an equal credit for each debit.
With that said.....
If you remember money into the bank is a debit, and that having money in the bank is an asset, then you know that assets are debits. Therefore liabilities must be credits.
If you know you received money from a sale, and it was banked, then you know that the sale must be a credit, as the money into the bank was a debit.
If money into the bank is a debit, then money out must be a credit. Therefore if I paid out money to my phone bill, it must be credit bank and debit phone expense, therefore expenses are debits.
I like the logical approach!
Good explaination!
Its a much better way of learning. You need to understand the accounts you're working on to know why things are going where they go, otherwise putting things into Dr or Cr based on memorising a list will only get you so far and likely to end up with mistakes with the more messy adjustents.0 -
Neither of you are alone, I never bothered with PEARLS or most other common acronyms as they often seemed more effort than learning the damned actual things in the first place. The only one I do remember using - and still do today - is ADS for asset disposals (Asset-Depreciation-Sale).
Like Monsoon, I remember all my double entry theory from the bank T account. Once you know cash in is a debit and cash out is a credit, you can pretty much figure everything else out: even transactions that don't directly affect the bank account are often somehow linked to it, six degrees of separation and all that BS.0 -
The only thing I remember was assets are debited, laibilities are credited. Hadn't even heard pf PEARLS or DEAD CLIC till last year!0
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PEARLS was my saviour at the beginning but more people seemed to use DEAD CLIC. Now I cant remember any of them!...........................only kidding. :laugh:0
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I remember struggling with double entry for some time. Partly due to my own stupidity no doubt but don't think the way it was taught helped. Looking at receipts and payments separately with various complicating issues like settlement discounts and VAT it was hard to see the whole picture. It was only when we did trial balances that it all clicked.
I think I used PERLS at the start and then either flows in (dr) and out (cr) of accounts or increase in assets / decrease in liabilities for debits and vice versa for credits (is that right it's been a while?). In the end though, much of the time, you end up just knowing where entries need to go.0 -
I think I used PERLS at the start
... there goes a man with no assets.
I agree with you on that though Chris. (Bank) payments and receipts would have been better shown using both sides of a T account from the outset as in real life, rather than the full on Dickensian way we were taught in class.
As for entering invoices into the accounts, daybooks, whatever - if they'd simply said "Debit the debtors" and "Credit the creditors" we'd have all saved so much time and stress!0 -
PEARLS was the one for me.
And for current assets on the balance sheet...
Sit
Down
Pretty
Black
Cat
Stock, Debtors, Prepayments, Bank, Cash0 -
And for current assets on the balance sheet...
Sit
Down
Pretty
Black
Cat
Stock, Debtors, Prepayments, Bank, Cash
Actually, I used this one too. Simply to remember the different types of current assets that go in the top half of the BS, as I was getting used to the way accounts looked.0 -
For me learning the bank entry dr and cr's was key, after that all other entries can be followed through with pen paper and a few T accounts.
I seem to remember ( it was a while ago ) that it all seemed totally confusing & then suddenly it all clicked into place.0 -
.
As for entering invoices into the accounts, daybooks, whatever - if they'd simply said "Debit the debtors" and "Credit the creditors" we'd have all saved so much time and stress!
i agree on that bit
as for he bank being the opposite way round, my saying is "in, out, shake it all about" which just tells me to do the opposite for the bank element
tracy0 -
And for current assets on the balance sheet...
Sit
Down
Pretty
Black
Cat
Stock, Debtors, Prepayments, Bank, Cash[/QUOTE]
Wish someone told me that one when I was learning.......................how'd I miss that I usually know all the acronyms!0 -
as for he bank being the opposite way round, my saying is "in, out, shake it all about" which just tells me to do the opposite for the bank element
tracy[/QUOTE]
Hence the picture on your profile Taskey?0 -
Pearls rule
This is what I typed up the other day regarding pearls:
to INCREASE to DECREASE
Purchases Dr Cr
Expenses Dr Cr
Assets Dr Cr
Revenue Cr Dr
Liabilities Cr Dr
Sales Cr Dr
(or sometimes the "S" stands for Sources of funds, i.e. capital)
This is how I remember it all anyway.0
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