Accounting AS · Financial accounting. The idea in plain words, the rules to remember, the mistake to avoid and a worked example, written and checked by Mega Lecture.
Every transaction has two effects, so it is recorded twice: a debit in one account and an equal credit in another. This is double entry, and it keeps the accounting equation in balance at all times.
A transaction is first listed in a book of prime entry, taken from a source document such as an invoice or credit note. It is then posted to the ledger accounts. At the end of the period the ledger balances are listed in a trial balance to check that total debits equal total credits.
Accounting concepts, such as business entity, prudence and matching, are the agreed rules that decide what is recorded, when, and at what value.
Entering a machine bought on credit in the purchases journal. That journal is only for goods bought for resale; a non-current asset bought on credit goes in the general journal.
Answer: Capital is $46,500.
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