CR - wamark.co.za

Report
The Accounts of the General Ledger
BALANCE SHEET SECTION
CAPITAL
CREDIT (CR)
+
DEBIT (DR)
+
DRAWINGS
+
ASSETS
-
-
LIABILITIES
+
NOMINAL SECTION
-
INCOME
+
+
EXPENSES
Wamark Publishers ©
Transaction:
Rendered a service and is receiving a delayed
payment i.e. Current Income R 500
Assets
Income
Expense
+
+
+
Effect on Accounting Equation
DR
Debtors Control(A) CR
Current Income
500
DR Current Income (I) CR
Debtors Control
500
Debtors Control is an Asset which
increases when a service is
rendered without being paid
immediately
Current Income is an Income which
increases Owners Equity
A
+ 500
=
=
O/E
+500
+ L
+ 0
Wamark Publishers ©
Transaction: Credit Sales R 200, cost price R150
Assets
+
DR
Income
+
Debtors Control(A) CR
Sales
DR
200
Sales (I)
CR
Debtors Control 200
DR
Trading Inventory (A) CR
Cost of sales
DR Cost of Sales ( E) CR
Trading Inventory 150
150
Expenses
+
Liabilities
+
Effect on Accounting Equation
Debtors Control is an Asset that
increases when a sale is made.
Sales is an income. An income
increases Owner’s Equity.
A
=
O/E
+
L
+ 200
= + 200
+
0
Trading Inventory is an Asset which
decreases when goods are sold.
Cost of Sales (Cost Price) is an
Expense which decreases Owner’s
Equity
A
=
O/E
+
L
- 150
=
- 150 +
0
What is the profit in Rands?
Wamark Publishers ©
Transaction:
Purchase stock on Credit e.g. R700
Assets
+
-
Income
+
Expense
+
Liabilities
+
DR Trading Inventory(A)CR
Effect on Accounting Equation
Creditors Control 700
Trading Inventory is an Asset which
increases.
Creditors Control is a Liability which
increases
DR
Creditors Control (L)CR
Trading Inventory 700
A =
+ 700 =
O/E
0
+
+
L
+ 700
Wamark Publishers ©
Transaction:
Making use of a service and paying at the end of the
month e.g. Repairs R 700
Assets
+
-
Income
+
Expense
+
DR Repairs (E) CR
Creditors Control 700
DR
Effect on Accounting Equation
Repairs is an expense which
decreases Owner’s Equity.
Creditors Control is a Liability which
increases
Creditors Control (L)CR
Repairs
Liabilities
+
700
A
0
= O/E
= - 700
+
L
+ +700
Note that the Accounting Equation
is still balanced
Wamark Publishers ©

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