Recording transactions – Journal entries and the T-Accounts

Ok let’s recap what we have done so far….

First of all you have transactions which you have to identify according to the category. The categories involved were assets, liabilities, equity, revenue and expenses. Then you determine the increase and decrease of each account thus translate them into debits and credits.

We then construct journal entries stating the accounts as well as the amount of each transaction. Remember, every transaction must have two accounts involving the same figures. That is why we should get our accounts balance.

Preparing the ledgers or some say the T-account will be done right after we confidently finished the journal entries recording each or the occurred transactions. The entry of the T-Account somehow making some students confuse due to the account containing an opposite accounts name inside. For example….

Starts business with cash RM20,000, then the journal entries would be

Dr Cash    Cr Equity (of the same amount at both sides)

But in the T-account is different, under the T-account of Cash, there will be the word equity at the debit side. This is because, the increase in cash of RM20,000 was due from the equity. Same goes to the equity T-account where the increase of equity will be at the credit side which the word cash appears.

Lastly, we do balancing off….. we shall continue the BALANCING OFF on the other page….


See ya!


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