4.6 Ledger entries

Economic and management sciences

Grade 9

Business, consumer and financial knowledge and skills

Module 21

Ledger entries

section 2: ledger accounts

ACTIVITY1:

To do ledger entries

[LO 3.3]

An account is a separate record in which all transactions for a particular item are entered.

An account takes the form of a T and comprises three sections, namely:

• the name of the item, for example, bank account;
• the left-hand side, called the debit side, and
• the right-hand side, called the credit side.

• For example:

  

Debiting an account means to do an entry on the debit side. Crediting an account means to do an entry on the credit side.

Every transaction affects at least two accounts. The one account is debited and the other account is credited. This is known as the double-entry system . In the details column of the ledger account the name of the other account involved in the transaction appears, for example:

This means that cash sales to the value of R1 000 were made. The two accounts are therefore bank and sales. The double entry will be as follows:

The following rules must be taken into account in the case of entries in ledger accounts:

• When an asset is increased, the bank account is debited
• When an asset is reduced, the bank account is credited
• When a liability is increased, the liabilities account is credited
• When a liability is reduced, the liabilities account is debited
• When capital is increased, the capital account is credited
• When capital is reduced, the capital account is debited
• When income is increased, the income account is credited
• When income is reduced, the income account is debited
• When expenditure is increased, the expenditure account is debited
• The opening balance of accounts that increase on the credit side, appears on the credit side
• The opening balance of accounts that increase on the debit side, appears on the debit side

ASSIGNMENT 1:

• Determine the effect of Ledger Accounts on A = O + L by analysing the transactions in the table.

1. Owner deposits some of his personal funds as capital in the bank account of the business.

2. Equipment is purchased and paid by cheque.

3. A vehicle is purchased on credit.

4. Cash is received for services provided.

5. Salaries are paid by cheque.

6. The amounts owed to creditors are paid.

7. Money is received from debtors.

Table for assignment 1

ASSIGNMENT 2:

• Answer the following questions according to the columns in the table:

(a) Arrange the accounts in the columns in the table.

(b) Indicate by means of +, - or 0 next to the account whether an increase in it will increase or reduce the ownership interest or leave it unchanged.

(c) Indicate by means of dt. or cr. next to the account whether the account will have a debit or credit opening balance.

table for assignment 2

ASSIGNMENT 3:

• Do the following debit and credit entries on the ledger sheet (below):

1 The owner invests R12 000 as capital in the business

2 A vehicle is purchased on credit from TP Motors

3 Fuel is purchased and paid by cheque

4 Cash for service provided is received

5 Salaries are paid by cheque

6 Goods on credit to J. van Schalkwyk are supllied

7 Rent by cheque to A and B Lessors is paid

8 The owner takes cash for his personal use

9 Materials are purchased on credit from AB Suppliers

10 Equipment from Model Suppliers and pays by cheque is purchased

11 Receives the amount owing from J. van Schalkwyk

12 Part of the debt to TP Motors is paid

13 Goods are sold for cash

Table for assignment 3

Assessment

Memorandum

ACTIVITY1

ASSIGNMENT 1

ACTIVITY 1

ASSIGNMENT 2

ACTIVITY1

ASSIGNMENT 3