The double entry system of book-keeping

• Every transaction is recorded twice: a debit in one account and a credit of the same amount in another.
• Debit an account for an increase in an asset, expense or drawings; credit it for an increase in a liability, capital or income.
• Post transactions to ledger accounts, balance them at the end of the period (Balance c/d, Balance b/d) and transfer income and expense accounts to the income statement.
• Read an account’s balance: a debit balance on a customer’s account is money owed to the business; a credit balance on a supplier’s account is money the business owes.
• The ledger is divided into the sales ledger, the purchases ledger and the nominal (general) ledger.

Two entries, equal amounts, opposite sides

Each ledger account has a debit (Dr) side on the left and a credit (Cr) side on the right. For every transaction, one account is debited and another credited with the same amount, so total debits always equal total credits. This is the duality principle.

Name the other account in the Details column

In each entry, the Details column names the account that holds the other half of the entry. So when capital is paid into the bank, the bank account says “Capital” and the capital account says “Bank”. Folio columns and running-balance accounts are not needed for 0452.

Worked example

Kim Lee started a business. Post these May 2025 transactions to the ledger. May 1 paid $15,000 capital into a business bank account. May 3 bought goods on credit from Ace Supplies $2,400. May 6 bought equipment by bank $3,500. May 10 sold goods on credit to R Tan $1,800. May 14 cash sales $650 paid straight into the bank. May 18 paid rent by bank $900. May 22 R Tan paid $1,000 by bank. May 28 paid Ace Supplies in full by bank. May 30 Kim withdrew $300 from the bank for personal use.