Comments

  1. avatar says

    Hi John
    I’m greatful and glad to be back after CBE for f1 and 2. Thanks to you for the easy to understand lectures. My wife too has joined and you won’t believe her excitement after the first lecture that we watched together. Apologies if this isn’t the right platform to express our feelings. Please keep up the wonderful and noble work of sharing this much needed knowledge. Your teaching beats ( I dare say) the BEST

  2. Profile photo of Abror says

    Hi Mr John…Explanation of how to record transactions in prime books is great but What is so frustrating for me is how to write them in T accounts…I can’t get it…so annoying…You explained about the cash accounts which if I receive money I debit because in this case Debit means owns for credit vice versa is true…No problem about cash account……..BUT HOW ABOUT OTHER ACCOUNTS such as payables You said straightaway if we make purchase on credit we debit payables and credit cash without explaining the meaning or what happens if we pay rent in rent account nothing has been mentioned…I find it difficult doing other account except cash account which was explained clearly….? I would be greatful if you explained this more clearly…I’ve been studying accountancy relying on your courses which are explained clearly…But I’m stuck in this topic T account…Thank you…

    • Profile photo of John Moffat says

      Two things:

      First, have you watched all of the lectures in order? Because all of the double entries are explained in the lectures. And in the lectures on books of prime entry I do later go through the debits and credits in the example.
      I go through all the other accounts such as payables. As regards rent – of course I explain the entries. You obviously have not watched all the lectures properly.

      Second, Paper F3 is not a debit/credit exam. There are very few questions that ask for the debits and credits – these days most businesses use computers and they know how to debit and credit. What the exam is testing is your accountancy knowledge and the job of the accountant is to understand the logic of books of prime entry, and to decide what method to use for deprecation etc. (because computers have to be told what to do – they cannot decide on the depreciation policy, or decide what allowance to have for receivables etc..)

    • avatar says

      Hello John

      I have a problem with double entry?

      Is there any principal that i can master to understand.
      possibly get everything right.

      How do u know that this T account i should call it a purchase a/c payables a/c, car a/c

      as in the example 1 of
      chapter 3

      please help

      • Profile photo of mansoor says

        rules:

        dr asset, expenses
        cr liabilities, equity/capital, revenue

        as far as knowing what call a t account, u have understand the transaction being discussed. in the beginning u will find this difficult but “analyzing” a transaction comes with practice.

        usually the description of the transaction will give u all the info u need. eg:

        “bought goods for 400 on credit” … ‘on credit’ means u still have to pay for the goods thus its a payable. ‘goods’ means u bought stuff for further sale .. which means purchases.

        “bought stationery for 100 cash”.. so u bought stationery .. which means u incurred an expense on stationery, so ur t account wd be stationery expense. since u paid cash, u wd credit cash t account.

        in short, read the description and dont be afraid to make mistakes..:)

      • Profile photo of Rustam says

        I dont understand the difference between commission and principle, sir. it is poorly written in my book. could you explain pls. Thank you.

      • Profile photo of John Moffat says

        I will explain (although please in future ask this sort of question in the Ask the Tutor Forum – not as a comment on a lecture). Also, if you watch all of the lecture you will find that everything is covered (and then you would not need to ask this!).

        An error of commission is simply post to the wrong account. However, if (for example) you pay rent but by mistake it is posted to motor expenses, then although it is wrong, it won’t affect the final profit (because both rent and motor expenses are expenses).

        An error of principle is again posting to the wrong account, but posting to an asset or liability account instead of to an expense or income account (or the other way round).
        For example, suppose you pay rent, but by mistake it is posted to the Land and Buildings account. Again, it is obviously wrong, but this time it will make the final profit wrong (and the Statement of financial position as well), because there should not be any expense for this amount.

        (By the way, if you watch all of the lectures then it is a complete classroom course and you don’t need a book to study from :-)
        All you then do need is a Revision Kit so that you can practice lots and lots of questions).

    • Profile photo of John Moffat says

      The fact that the missing figure is on the credit side is because the total of the debits during the period was more than the total of the credits.

      So we then carry it forward to the opposite side i.e. the debit side and start the next period with a debit balance, because the net of the debits and the credits was a net debit.

      • Profile photo of fahim231 says

        ohhh right I see, thank you.
        Do you have any tips in remembering debit and credit?
        does debit effectively mean incoming and credit means outgoing?

  3. avatar says

    HI Good day, I have watch your video in bookkeeping and I am still getting some problems in it for instance, MR JRK business on 1 March 2014
    1st He introduced cash of $900,000 into the business
    2nd He made credit purchases of inventory valued at $220,000
    5th Credit Sales were $500,000
    6th He paid $150,000 to purchase two vehicles for the business
    7th He rented a new office for $17,000
    8th He purchases used office furniture for $25,000
    9th He got a loan of $700,000 from the bank
    10th He paid salaries $40,000
    22nd A debtor paid $155,000
    28th He paid a creditor $110,000
    29th He repaid the bank, $170,000 of the loan be borrowed on the 9th

    *This is what I have done:
    DATE DEBIT CREDIT AMOUNT $
    1st Cash Capital $900,000.00
    2nd Purchases Payable $220,000.00
    5th A/C Receivable Sales $500,000.00
    6th A/C Payable Cash $150,000.00
    7th Rent Cash $ 17,000.00
    8th Office Furniture Cash $25,000.00
    9th Cash Loan $700,000.00
    10th A/C Payable Cash $40,000.00
    22nd Cash A/C Receivable $155,000.00
    28th A/C Payable Cash $110,000.00
    29th A/C Payables Cash $170,000.00

    I just want to know if everything is correct. If it have any corrections to be made please let me know. It would be greatly appreciated. Thanks a lot!

    • avatar says

      This is what I have done:
      DATE DEBIT CREDIT AMOUNT $
      1st Cash Capital $900,000.00
      2nd Purchases Payable $220,000.00
      5th A/C Receivable Sales $500,000.00
      6th A/C Payable Cash $150,000.00
      7th Rent Cash $ 17,000.00
      8th Office Furniture Cash $25,000.00
      9th Cash Loan $700,000.00
      10th A/C Payable Cash $40,000.00
      22nd Cash Receivable $155,000.00
      28th A/C Payable Cash $110,000.00
      29th A/C Payables Cash $170,000.00

      Sorry about that, I have send it over because it was looking a bit confusing. It was to jumble up. I have send this part over again

  4. avatar says

    Hi, I just have one question to ask you. in double entry, and the statement is:
    He repaid the bank, $170,000 of the loan be borrowed on the 9th -should I debit loan and credit cash in the double entry?

  5. avatar says

    Hi, there!
    I could only download the chapter one video ”Introduction to Accounting” since there was a link below the video.
    But, for other videos I couldn’t find any links!
    Thanks so much.

    • Profile photo of John Moffat says

      I dont understand what you are wanting.
      You can only download the Course Notes.
      You cannot download the lectures – you can only watch them online. (It is the only way that we can keep this site free of charge)

  6. Profile photo of theimaginarynumber says

    I watched this because the BPP notes made no sense but this still makes no sense. Why is everything the opposite to what I’d expect? Cash received is a debit to the cash account. Cash paid is a credit to the cash account. Buying goods is a credit to the payables account. Paying rent is a debit to the rent account. Have I suddenly moved into a parallel universe?

    • Profile photo of John Moffat says

      You do not say why you expect everything to be opposite!!! (although I can guess why :-) )

      Double entry is only a set of rules, and since the whole world has always done it the same way, it would be very confusing if we were to do it differently!!!
      Certainly crediting payables when we owe money is very logical – it explains why people often call someone we owe money to a creditor :-)

      I am guessing that what is confusing you is what your bank statement says – it seems like the bank is doing things the other way round.
      In one sense we do not care what the bank does – we are writing up our books (not the banks).

      However, the bank is doing it correctly anyway. This is explained in the later chapter and lecture (bank reconciliations), but what is happening in the bank is this: if we put money into the bank, then in the banks own books they debit their cash account because they have received cash. In their own books they credit an account for us because they owe the money to us. So…..on the bank statement they say we have a credit balance – it means they owe us money. i.e. we have money.

      But again, what we are concerned about is our own books, and in our own books we debit our cash account when we receive money, and in our own books we credit our cash account when we pay money.

    • Profile photo of John Moffat says

      The inventory account was not relevant for the examples in this chapter. Deliberately this chapter deals with the basic recording, ignoring inventory / accruals and prepayments / irrecoverable debts / depreciation. These are all covered in detail in later chapters.

      The recording of inventory is covered in the chapter on inventory (Chapter 9) in our course notes. There are lectures on this chapter also.

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