Single Entry And Double Entry

                             Single Entry And Double Entry 

                                     Single Entry

Every transaction affects two accounts- one account is debited and another account is credited. Thus in recording a transaction in a journal one account is debited and other account is credited. This type of entry is called Simple Entry.

Example:

          on 10.4.2015 we bought furniture from Salman Bros for Rs. 5000. The entry is :

                                                                                                                            DR.                      CR.   

Date                         Details                 L.F.   Amount   Amount

                                                                               Rs.            Rs.

2015          Furniture A/C                                    5000

Apr.10              Salman bros.                                                   5000

                  (Being furniture bought on 

                                credit)

                                                                                                            

                             Double Entry

 The entry in which more then one account is debited or more then one account is credited, is known as Double Entry. Three or more accounts are connected with Double Entry 

Example:

We paid Rs. 500 on account of salaries and Rs. 300 on account for rent. For this entry will be:

                                                                                                                            DR.                      CR.   

Date                          Details                 L.F.   Amount   Amount

                                                                Rs.            Rs.

2015       Salary A/c                                             500

Apr.10       Rent A/c                                                300

                             Cash A/c                                                        800

              (Being salaries and rent paid)

                                                                                                            

Here two accounts have been debited and the entry involves three accounts. Hence it is a Double Entry.

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Techniques for Journalizing

                                 Techniques for journalizing

How a transaction is recorded in journal, is has been discussed : Suppose the transaction is ---

purchased furniture M.Asif on 10.1.05 for Rs. 8000.

Here furniture A/c is debited and Mr.Asif A/c is credited.

                                       JOURNAL                                                  

Date                         Details                                    Dr.            Cr.

                                                                          Amount        Amount

                                                                                                            

2005

jan. 10           Furniture A/c                 Dr.        8,000

                     

                       Mr. Asif A/c                                                   8,000

          

                      (Being cost of furniture 

                                      purchased)

                                                                                                            

Now the various columns of journal are explained in details below:

1. DATE: 

The date of transaction is written in this column in two lines- in the first line, the year and in the second line, first the name of the month and thereafter the actual date

2. DETAILS:

In this column the name of two concerned accounts are written in two consecutive lines- in the first line the name of accounts debited and in the second line the names of accounts credited. While the name of the account debited always placed close to the left-hand margin line, the name of account credited is commenced a short distance away from the margin line. This arrangement will show you which account is debited and which account is credited.  In the third line Narration is written usually within a bracket. According to traditions, narration is written starting with the word "Being".But modern practice is not to use this word.

3. L.F.(LEDGER FOLIO):

The page number of the ledger where the two concerned accounts have been posted, are written in this column against the name f each account 

4. AMOUNT:

The debit amount is written in the first "Amount " column against the  name of account debited and credited amount in the second "Amount" column against the name of account credited. 

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Recording The Entry In Journal

                        Recording The Entry In Journal

                                           Entry 

Recording a transaction in the appropriate place of the concerned book of account is called Entry.

Entry may be divided into two:

1. Journal Entry
2. Ledger Entry 

                                         Journal Entry

Recording a transaction in a journal is called journal entry or journalising.

                                          Ledger Entry

Recording a transaction from journal to the concerned account in ledger is called ledger entry. it is also known as ledger posting.

                                           Narration

A short explanation of each transaction is written under each entry which is called Narration. The  subject matter of the transaction can be ascertained through narration. Besides this, if there may be any mistake in determining debit or credit aspects of a transaction, it can be easily detected from narration.

      "A journal entry is not completed without narration."

                               Characteristics Of Journal

• Journal is the first successful step of the Double Entry system. A transaction is recorded first of all in the journal. So, journal is called the book of Original Entry
• A transaction is recorded on the same day it takes place. So, journal is also called a Day Book.
• Transaction are recorded chronologically. So, journal is called Chronological Book .
• For each transaction the names of two concerned accounts indicating which is debit and which is credit, are clearly written in two consecutive lines. This makes ledger-posting easy. That is why journal is called "Assistant to ledger" or "Subsidiary Books".
• Narration is written below each entry.
• The amount is written in the last two columns - debit amount in debit column and credit amount in credit column. 

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Journal : The Original Book Of Entry

                     Journal : The Original Book Of Entry

Now, we are in good position to record various business transaction in proper books of accounts. According to double entry system transaction are recorded in the books of accounts in two stages:

                  

                                    First stage → Journal

                                  Second stage → Ledger

The flow of accounting information from the time a transaction take place to its, recording in the ledger may be illustrated as follows:

        

                       Business TRANSACTION occurs

                                                   ↓

                        Business DOCUMENT prepared

                                                   ↓

                         Entry recorded in JOURNAL

                                                   ↓

                          Entry posted to LEDGER

                                   

The initial record of transaction is evidenced by a business such as invoice , cash voucher etc.

Transactions are first recorded in journal and thereafter posted to the two or three concerned accounts in the ledger

                                                  Definition

The word "journal" has been derived from the french word "jour". Jour means day. So journal means daily. Transactions are recorded daily in journal and hence it has been named so. As soon as a transaction take place its debit and credit aspects are analysed and first of all recorded chronologically in a book together with its short description. This book is known as "journal". Thus we see that the most important function of journal is to show the relationship between the two accounts connected with a transaction. This facilitates writing of ledger. Walter Griorson has rightly described the book as "simply assistant of ledger". 

 Transactions are first of all recorded in Journal, so it is called BOOK OF ORIGINAL  ENTRY

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Rules For Debiting And Crediting Of An Account

               Rules For Debiting And Credting

There are two types of changes in an account, e.g. either there will be increase or there will be decrease. Take the example of cash (an asset), either there is flow of cash or there is outflow of cash. To record these two types of changes, every account  is devided in two sides. Increase is recorded on the one side and the decrease is recorded on the other side.

The specimen of an account is shown bellow:

                   Dr.                 TITLE OF AN ACCOUNT                Cr.

                                          ‖

              left side                         ‖                right side    

                 Or                                                         Or

                debit side                                        credit side

When a chnage take place in an account, either it will it will be recorded on the left side (debit side) or on the right side (credit side). Amounts  recorded on the left side of an account, regardless of the account title, are called debits and the accounts said to be debited. Amounts recorded on the right side of an accounts are called credits, and the account are called credited.

All the accounts are kept in a register known as "LEDGER". Recording business transactions in various account in ledger is in fact 2nd phase of accounting cycle (1st phase is JOURNAL).

All the accounts maintained in the ledger of the business are classified into five;

1. Accounts of Assets.
2. Accounts of liabilities.
3. Accounts of Owner's Equity.
4. Accounts of Expences. 
5. Accounts of revenue.

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What Is An Account

                                             An Account

In business concerns, numerous transactions take place every day. For example, goods are sold to various customers every day, purchases are made from suppliers, cash is paid to creditors and is recieve from debtors, expences are paid etc. All these transactions should be properly analysed and recorded. Again, the concept of double change in a business transaction should be keep in mind. To record these changes different accounts are maintained in the ledger.

Now what is an account?

              "Accountis the individual record of an asset,
                 a liability, a revenue, an expence or capital 
                                in a summriesd manner."
For example:
        The individual record of cash (an asset) is known as cash account, the indvidual record of purchases is Purchases Account, the indvidual record of capital is Capital Account, the indvidual record of sales is Sales Account.

Ledger accounts:

In the same way there are so many accounts which are opned in the ledger like Salary Account, Machinery Account, Furniture Account, etc. How many accounts there should be in ledger of a business? It depends upon the nature and the                                                         size of the business.

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Single Entry System

                                     Single Entry System

From the very name of the system it aparently seems that a system in which only one aspect of a transaction is  recorded , is called single entry system.But in fact it is not so. This system does not observe any systematic rule. Under this system, some transactions are recorded on both sides like Double Entry System, some are recorded on one side only, while some other are not recorded at all. According to Arthur Fieldhouse, "Single Entry is faulty, incomplete, inaccurate, unscientific and un systematic style of  account-Keeping".

Single Entry is a misnomer. So it is very difficult to give a propper definition of the system:

               "Single Entry is that which is not a Double Entry ".

                   "A system is nothing but a mixture of Double

                            Entry, Single Entry and No Entry".

• For some transactions both the ascepts are recorded, while for some other only one ascept is concidered. Again , some transactions are not recorded at all. Thus, complete analysis of a transaction is not always possible.
• Only cash a/c and Personal Accounts are maintained.
• Mistakes and defalcations cannot be detected easily.
• There is no rules here as such.

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