ACC1000 Chapter Notes - Chapter 3: Income Statement, General Ledger, Capital Account
6 Jun 2018
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Chapter 3 General ledger
Double-entry accounting: the principle that for every business transaction, there will be at least two effects
on the accounting equation.
General Ledger: the collective name for the main group of ledger accounts.
Ledger accounts:
accounting records showing all the transactions that affect a particular item
*Each transaction changes at least two items in the accounting equation, so at least two ledger accounts will
need to be changed.
General Ledger:
the collective name for the main group of ledger accounts.
The T-form account (*Debit on the left, credit on the right!!!)
Neither should be consider as simply good or bad. One of these columns will be used to record increases in
the value of the item; the other will be used to record decreases.
Eg. If owner contribute $30,000, then bank account will debit by $30,000 while Capital account will credit
for the same amount。
If it’s a credit purchase of stock($1,100, GST inclusive), then stock control account will debit by $100, GST
account will debit by $100(GST receivable), and creditors control will credit by $1,100.
3.2 Double-Entry Recording In Ledger Accounts
Assets
Liabilities and owner’s equity
Recording Ledger Entries
cross-reference
The space between the date and the amount of each transaction is used to record what is know as the
cross-
reference
.
Cross-reference:
the name of the other account affected by a transaction, so that both accounts affected by
a particular transaction can be identified
It is the amount(not the cross-reference) that determines whether an account has been debited or credited.
E.g. for owner’s contribution of $40,000, it appears on the left(debit) side of bank by $40,000, and is cross
reference to capital, the cross reference only appears to show the name of the other account affected by
that particular transaction, doesn’t mean that capital account is debit!!! Because capital account is actually
credited by the same amount in this case in order for it to balance!
For cross checking:
