Accounting Framework Double Entry

Due to the discussion we did the last time naturally this is pushing us to new thought to be totally awareness about the basic fundamentals of Accounting
This Factor one of the most important factors in Write up work the main procedure of Accounting . Thus we have to ride our horse and begin from the
scientific term and definition .

Double entry system :
This system or manner was named by Accountants because of the dual that was derived from and be the only system of the framework for recording data and ledger .
As we said it depends on the dual that mean we have two sides right and left Certainly it mean more than left and right as we will figure it now
beside this our system didn't configure irregularly but it based on the main equation of Balance sheet :
Assets = Liabilities + Owner's equity +[ income =(Revenues - Expenses) ]
Note : we can call this equation The expanded equation

Therefore our system that called Double entry starts here as right and left two sides consist of amounts in each side have to be equaled and this another way
to figure the balance sheet equation . we can call the two sides Debit and Credit That's like what I owe and what I own .
This minor basis was derived from the main basis which is ( Resources = Sources of resources ) .
Question present itself : how we can use this system ?
Telling the use of this system require the recognizing of :

First : The pure basis :


* Resources = Sources of resources


* Assets = Liabilities + owner's equity


Second :What the two sides of the pure basis consist and that I think we get a long time to explain it before , in other words what Assets include
and what Liabilities include .

Third : [ The critical point is which one increases and which one decreases . ]

After detecting this steps we can completely apply the system as shown here :


Assets = Liabilities + Owner's equity + Income ( Revenues - Expenses )

(+) Debit (+) Credit (+) Credit (+) Credit (+) Debit

(-) Credit (-) Debit (-) Debit (-) Debit (-) Credit

Note : (+) refers to increasing
(-) Refers to Decreasing

Any Accounting transaction have to affect at least two accounts but it can affect more one account .


For example :


- If we say that Mostafa invests 50,000 pounds in business .

Solution :
We can after following the steps say that the two affected accounts is (Cash Classified under Assets) and (Capital Classified under Owner's equity)
Cash (+) that's mean it 's (debit) and Capital (+) that's mean it's(Credit) the change here in two side and two difference account at least

Cash 50,000
Capital 50,000


- Mostafa borrows 20,000 pounds from the bank .

Solution :
It seems to affect two sides and two difference Accounts also that mean (Cash classified under Assets) and (Note payable classified under Liabilities)
Cash (+) (Debit) Note payable (+) (Credit) .

Cash 20,000
Note payable 20,000

- Mostafa pays 6,000 pounds for some merchandise

Solution :
It's different this once because it affects one side but in two difference accounts ( Cash classified under Assets ) and ( Inventory classified under Assets)
Cash (-) (Credit) Inventory (+) (Debit) .

Inventory 6,000
Cash 6,000

- Mostafa pays 600 pounds rent of the place

Solution :
As usual the effect here is in two sides and two difference accounts ( Cash classified under Assets ) and ( Rent classified under Expenses )
Cash (-) (Credit) Expenses (+) (Debit)

Expenses . Rent 600
Cash 600


And so on , and so forth .

Best hopes ,
Mostafa