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Double Entry Bookkeeping (part a) – ACCA Financial Accounting (FA) lectures

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  4. Hello Sir, would I have been wrong if I had debited the capital account with the $100 Kristine the owner took and credited cash of $100 instead of opening a drawings account since drawings go on to reduce the capital we owe to the proprietor?

  9. Excellent, excellent lecture sir !

    Now I understand the logic about the background of T accounts (two sides of a physical page), nominal ledger (the entire book of accounts – I love how you showed a physical example of a book ), ledger = another word for book, and double entry (how you used cash account as the basis to relate to the results in other accounts)

    Other tutors would not go to such lengths or rather would lack your wisdom and capabilities to get the point across in such an easy and nice way.

    Although I do wonder, why would would someone waste an entire two pages for a Car account – not much activity can be expected from it in the future. Why not just create a single non asset account including all such future non asset purchases such as cars etc within them to save space.

    • They are covered in a later lecture (Books of Prime Entry), because day books are not actually part of the double entry.

      There is nothing missing – the lectures are a complete free course and cover everything needed to be able to pass the exam well.

  15. Hi sir, good day to you!!
    Thank you for your lecture!
    Just a small question: In real life, when we prepare for a T account if we purchase a car, will we call it ‘car account’ or ‘asset account’? Thank you!!

      • sir, help me.
        a company does not manage to get all of its WIP processed before the end of the period. the followings are introduced into process 1.
        raw materials 1500 units $12000
        labour $8880
        overheads $2930
        closing WIP 50 units completed as below
        raw materials 100% complete
        labour 60%
        oberheads 30%
        there were no losses.
        how to prepare appropriate ledger accounts and the statement of equivalent units. thankyou sir in advance. please reply ASAP

      • Firstly, this is a question that could be asked in Paper MA but not in Paper FA.

        Secondly, you must ask this sort of question in the relevant Ask the Tutor Forum and not as a comment on a lecture.

    • But using the extended accounting equation, if you’ve bought inventory, it is a + (debit) to the inventory account, and you would just take away (credit) the amount of goods actually sold, and the amount of goods actually sold becomes the cost of sales no?

      • Don’t forget to include the inventory balance b/f from the previous year.
        Cost of goods sold (COGS) or Cost of Sales = Beginning of Inventory + Purchase – Closing Inventory.
        Yes, Inventory is an asset always goes to debit side.
        I hope it helps.

  19. Hi! Firstly thanks in advance for clear explanation. This site is very good opportunity for the students who prepare “ACCA” self-study.
    So, I have one question from this lecture (double entry part A). In the last lecture you have mentioned that ” Buys goods for resale” means that this is inventory account. But in this lecture you said that in the third transaction: ” Buy goods for resale for 500$ cash” this will be “purchase” account. I am confusing in this part. Is this “inventory” account or “purchase” account?
    If you answered this question i will be very happy:)
    In any case i highly appreciate your effort and very grateful to your team 🙂

  20. Sir, why are drawings from the business recorded as a Debit to the drawings account and not as a Credit to the capital account since the owners financial interest in the business is now reduced?

    • The capital account is a credit balance – the amount owing to the owner – and so crediting the account would increase the amount owing, which is not what is happening!

      We would debit the capital account instead of debiting drawings – the net effect would be the same. However, it is better practice (and certainly for the exam) to record drawings separately so that on the SOFP we can show the capital less the drawings (plus the profit) so as to explain why the total amount owing to the owner has changed over the year.

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