This topic is the “core process” of bookkeeping. Once you understand debit and credit rules, you can record transactions correctly in the journal, classify them into ledger accounts, and finally prepare the trial balance to check arithmetical accuracy.
Many students get confused because debit does not always mean “bad” and credit does not always mean “good”. Debit/credit simply means left side/right side of an account as per rules.
Journal is a book in which transactions are recorded in chronological order (date-wise) with proper debit and credit.
Journalising means recording a transaction in the journal in the form of a journal entry.
Structure of a journal entry typically includes:
Journal is called the book of original entry because:
Golden rules are based on account classification:
These rules help decide which accounts to debit/credit.
Modern approach connects debit/credit with accounting equation:
Accounting equation:
General effects (very useful):
This approach is practical for quick decision making in exams.
Ledger is a book (or set of accounts) where transactions are classified account-wise. Each account (Cash, Sales, Purchases, Debtors, Creditors) has its own page or record.
Importance:
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Table:
Thus, golden rules help decide debit and credit for journal entries.
Modern approach uses accounting equation Assets = Liabilities + Capital.
Key points (any three):
Hence, modern approach quickly connects transactions to the effect on assets, liabilities, capital, income and expenses.
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This topic is the “core process” of bookkeeping. Once you understand debit and credit rules, you can record transactions correctly in the journal, classify them into ledger accounts, and finally prepare the trial balance to check arithmetical accuracy.
Many students get confused because debit does not always mean “bad” and credit does not always mean “good”. Debit/credit simply means left side/right side of an account as per rules.
Journal is a book in which transactions are recorded in chronological order (date-wise) with proper debit and credit.
Journalising means recording a transaction in the journal in the form of a journal entry.
Structure of a journal entry typically includes:
Journal is called the book of original entry because:
Golden rules are based on account classification:
These rules help decide which accounts to debit/credit.
Modern approach connects debit/credit with accounting equation:
Accounting equation:
General effects (very useful):
This approach is practical for quick decision making in exams.
Ledger is a book (or set of accounts) where transactions are classified account-wise. Each account (Cash, Sales, Purchases, Debtors, Creditors) has its own page or record.
Importance:
Posting is transferring entries from journal to the ledger accounts.
Steps (simple):
Balancing means finding the difference between total of debit side and total of credit side of an account.
Example:
Trial balance is a statement prepared at the end of a period showing debit and credit balances of all ledger accounts.
Objectives:
Basic format:
Methods:
In exam problems, balance method is usually expected.
Common types:
Errors that affect only one side or cause imbalance, like:
Errors that do not affect agreement, like:
So, agreement of trial balance does not guarantee zero errors; it only indicates arithmetical accuracy.
Transaction → Journal entry → Posting to ledger → Balancing accounts → Trial Balance
If these notes helped you, a quick review supports the project and helps more students find it.
Accounting errors can occur at recording, posting, totaling or classification stages.
Types (with examples):
Table:
Conclusion: Many errors may not affect trial balance, so further checks and rectification are required.